Commerce Bancshares (CBSH) 10-K/A 2000 FY Annual report (amended)

FINANCIAL HIGHLIGHTS

(Dollars in thousands)			1996				1997				1998				1999				2000
EARNINGS AND DIVIDENDS
Net interest income	$	365,743			$	397,774			$	427,745			$	466,001			$	480,653
Provision for loan losses		24,522				31,354				36,874				35,335				35,159
Non-interest income		159,162				180,092				214,037				236,209				252,808
Non-interest expense		317,954				344,450				379,344				419,015				430,381
Net income		119,512				132,702				150,091				166,213				178,574
Cash dividends		27,462				30,432				33,742				36,054				37,613
YEAR END TOTALS
Total assets	$	9,698,186			$	10,306,941			$	11,402,023			$	11,400,936			$	11,115,117
Loans, net of unearned income		5,472,342				6,224,381				7,046,852				7,576,892				7,906,665
Investment securities		2,721,515				2,664,931				3,031,716				2,508,415				1,940,903
Total deposits		8,166,429				8,700,578				9,530,197				9,164,123				9,081,738
Stockholders’ equity		924,271				980,784				1,080,785				1,079,832				1,143,755
Non-performing assets		15,081				24,376				20,352				14,326				21,324
Common shares outstanding*		68,148,680				67,107,428				67,428,322				65,492,961				62,521,867
Shareholders of record			5,733				5,694				5,904				5,730			5,440
RATIOS
(Based on average balances)
Return on total assets			1.28	%			1.37	%			1.43	%			1.50	%			1.62	%
Return on stockholders’ equity			13.40				14.08				14.58				15.40			16.22
Loans to deposits			67.07				70.93				75.24				77.94			87.26
Equity to assets			9.53				9.74				9.83				9.72				9.99
Net yield on interest earning assets
(tax equivalent basis)			4.40				4.61				4.56				4.61				4.74
Tier 1 capital ratio			13.06				12.10				11.30				11.68			12.04
Total capital ratio			14.20				13.22				12.59				12.99			13.36
Leverage ratio			8.84				8.81				8.80				9.17				9.91
Efficiency ratio			58.76				58.24				58.30				58.53			57.63
PER SHARE DATA
Net income - basic*		$	1.72			$	1.96			$	2.23			$	2.50			$	2.79
Net income - diluted*			1.71				1.93				2.19				2.47				2.76
Market price*			25.37				39.02				38.55				32.26			42.50
Book value*			13.56				14.62				16.03				16.49			18.29
Cash dividends*			.397				.450				.501				.544				.590
Cash dividend payout ratio			23.28	%			23.24	%			22.81	%			22.05	%		21.38		%

*Restated to reflect 5% stock dividend distributed December 2000

A MESSAGE TO OUR SHAREHOLDERS

THE YEAR 2000 PROVED TO BE ONE OF SOLID, SUSTAINED GROWTH FOR YOUR COMPANY. WE CONTINUED TO EXPAND MARKET SHARE, BUILDING ON OUR COMPARATIVE ADVANTAGE AS A SUPER-COMMUNITY BANK. WE’VE EXPANDED OUR INVESTMENT IN BOTH PEOPLE AND TECHNOLOGY TO IMPROVE OUR POSITION WITH OUR CUSTOMERS AS A HIGH TOUCH, SOPHISTICATED PROVIDER OF FINANCIAL SERVICES. CHANGES IN OUR INDUSTRY OVER THE LAST SEVERAL YEARS HAVE ONLY SERVED TO REINFORCE OUR BELIEF IN THE IMPORTANCE OF STRONG, PERSONAL CUSTOMER RELATIONSHIPS.

David W. KemperChairman

Commerce Bancshares, Inc. reported its tenth consecutive year of record earnings. Key performance highlights include:

• Earnings per share grew 11.7% in 2000 and averaged 13.1% annually over the last 5 years. The value of the Company’s common stock rose 34% this year and has risen by an average of 18% annually over the last 5 years.

• Cash earnings per share amounted to $2.84 in 2000, compared with $2.54 in 1999, an increase of 11.8%.

• Overall asset quality remains strong. Net loan charge-offs totaled .38% in 2000, compared with .41% in the prior year. The allowance for loan losses increased by $5 million to $128 million, or 1.62% of total loans. Non accrual loans totaled $19.6 million this year, higher than in the previous year, but still only .25% of total loans and a very low level compared with our peers.

• Total non-interest income grew by $17 million or 7.0% in 2000, with significant growth in credit card and trust fee areas. In the last 5 years, such fee-based revenues have grown from 27% to 34% of total revenues and contributed significantly to the growth and stability of the Company.

• Non-interest expense remained controlled all year with growth over the previous year of 2.7%. Even so, a number of new initiatives were undertaken during the year in software and systems, which will enable the Company to improve its product offerings and remain cost competitive.

• Cash dividends per share have increased 31% over the last three years, and in December the Company paid its seventh consecutive 5% stock dividend. In February 2001, the Board of Directors approved an 8.4% increase in the cash dividend rate, making this the 33rd consecutive year of cash dividend increases.

MICHAEL RINGER LOOKS CONSTANTLY FOR WAYS TO IMPROVE SERVICE. TIMELINESS OF ARP IMAGE DATA DELIVERY IMPROVED 76% DURING 2000. CHECKS AND STATEMENTS WERE MAILED WITHIN DAILY DEADLINES MORE THAN 99.5% OF THE TIME.
Michael RingerSenior Vice President, Manager, Bank Operations

PERSPECTIVE

Last year saw a continuation of the banking industry’s movement to more fee and transactional business with little growth in industry bank deposits. We recognize that, today, both our consumer and business customers use the banking system primarily for liquidity, safety and access to payment systems. We have responded by increasing our transactional account base by 5%, to more than 670,000 checking accounts. We view these transactional relationships as a key way to build deposits, but more importantly they can lead into broader relationships that allow us to find total financial solutions for our customer base. Over the last five years, fee income has increased from 27% to 34% of total income, while the number of transactional relationships has increased 60%.

Your company’s mission statement is captured in six key words, “Be Accessible, Offer Solutions, Build Relationships.” As we implement technology to increase the efficiency and flow of information, we believe our key asset and differentiating competitive factor remains the quality of our people. We continue to enjoy excellent stability in our management group, while we are stepping up our investment in both training and incentives to our employees. Better trained and motivated staff who are able to bring solutions locally to our customer base will continue to fuel our solid revenue and account growth.

Our size also continues to work in our favor. We are large enough to offer a full spectrum of financial services, yet positioned perfectly to maintain the level of contact that only grows in importance as the economic environment becomes more demanding.

Increasingly, we are perceived as the “local” financial services option even in markets where we have no nearby locations. Other financial institutions, acquired by the megabanks, continue to see customer perception diminish for both their service commitment and their local identities. As a result, Commerce continues to expand its footprint, while maintaining its position as a super-community bank.

PAYMENT SYSTEMS

Payment systems remain central to the Commerce customer relationship. In most cases, they are the entry point and provide a springboard to other service and revenue opportunities. But the expansion of both business and consumer relationships actually begins within our payment systems themselves. As our customers move from cash and checks into plastic and electronics, we become the source of increased efficiency and convenience. The bond we establish creates marketing leverage in key areas such as insurance and employee benefit programs.

BUSINESS

For our business customers, payment system options provide both efficient transfer of dollars and immediate access to information.

Commerce continues to add to its diversified portfolio of middle market companies, and continues to expand service offerings in this sector. Significant among them is our browser-based online balance reporting and transaction processing platform,Commerce Connections. Customers now have access to balance information and can initiate ACH payments via the web. In 2001, additional functions will be added, including wire

IN BRUCE BIENHOFF’S EYES, KEVIN CONNELLY IS A CUSTOMER AS WELL AS AN ASSOCIATE. HE REFLECTS THE EVOLVING NEEDS OF A LARGE SEGMENT OF COMMERCE BANK’S COMMERCIAL CUSTOMER BASE. ADVANCES IN ELECTRONIC IMAGING AND BROWSER-BASED ACCESS ARE HELPING TO MEET THOSE NEEDS.

Kevin Connelly(left) Senior Vice President, Manager, Treasury Services
Bruce BienhoffVice President, Manager, Corporate Product Development

RELATIONSHIP MANAGERS LIKE MARGARET SCHULLER-DECHANT
OFFER THE PERSONAL ATTENTION THAT MAKES PRIVATE BANKING
AN INVALUABLE SERVICE FOR COMMERCE BANK CUSTOMERS.
Margaret Schuller-DechantSenior Vice President, Wichita

transfers, collection (lockbox), disbursement (checks paid) imaging and a complete list of special reports.

Our substantial investment in treasury services continues to pay dividends. Business volume increased by more than 13% in 2000, and is up more than 68% over the last five years. International and money management services also have been expanded.

As imaging technology begins to provide our customers more efficient access to their accounts throughCommerce Connections, image-enabled enhancements within our lockbox processing area are providing significant efficiencies in back office processing. Similar technologies within our Account Reconciliation (ARP) applications are providing customers immediate access to paid items as well as archived paid checks via CD-ROM.

For small business customers, ourBusinessToolspackage continues to expand as an integrated suite of products. A new internet portal offers the convenience of a virtual branch bank, providing access to account detail, balance information, even news on customer-defined areas of interest.

A business debit card will also be added to theBusinessToolsportfolio in 2001, essentially duplicating the function and convenience of the debit card now enjoying overwhelming popularity with consumers.

To provide an extra measure of service for business customers, a centralized customer care facility was established in the heart of the bank’s operations center. This service, introduced during 2000 in Kansas City, allows us to be more responsive to our individualcustomer’s account needs. A centralized approach not only solves individual problems more effectively, but also looks for trends or patterns which, in turn, permit identification and resolution of systemic issues.

The procurement card continues to be another major success story in applied technology, with use increasing by 42% for the year. The card is not simply a convenient payment system, but also a key means for customers to track field activity and purchasing patterns through daily internet downloads. Card use can be controlled by SIC codes, or by daily or monthly expenditure limits.

Commerce also provides customers the option of branding the procurement card and marketing it to their customer base (e.g.: leased car or truck fleets) with all processing and reporting handled transparently by the bank.

CONSUMER

Our emphasis on retail payment systems as an entry point for customer relationships has contributed to transaction growth of 35%. Debit card transactions have continued to grow at a rate of 50% annually. At year-end, debit card use (measured in number of transactions) had more than tripled that of credit cards.

Through checks, cash, credit cards and debit cards, we maintain our commitment to model our systems around customer preference. Because of our early marketing emphasis on alternative payment forms, we remain well ahead of the industry average for the percentage of customers using their debit cards: Commerce 65% vs. the Visa national average of 55%. Our debit card transaction volume averaged 14 transactions per monthly statement vs. Visa’s national average of 9 transactions.

A WARM HANDSHAKE ISN’T ALWAYS PHYSICAL. CYNTHIA TETRAULT AND GEOFFREY THOMAS WORK WITH A COMMON GOAL: THAT EVERY E-COMMERCE DEVELOPMENT WILL MAKE INTERACTION WITH THE BANK MORE SATISFYING TO THE CUSTOMER.

Geoffrey ThomasVice President, Director, Database & Direct Marketing
Cynthia TetraultProduct Manager, Online Banking and Internet

“Smart card” technology is also taking its place in the product mix. Through a growing number of University Card programs, students are provided local payment cards co-branded by Commerce and participating universities. The cards provide real-time updates on available limits, and can be replenished from parents’ accounts through our Automatic Cash From Home program.

The way consumers do their banking is changing right along with payment methods. Internet banking has increased dramatically due to a combination of effective marketing and ease of use. During 2000, new customer accounts totaled 31,000, an increase of 110% for the year. More than 90 percent of customers signed up are actually using their internet banking connection. That’s more than double the national average.

The signup and usage figures grow in importance when you look at some additional numbers. Our online customers are 20% more profitable, and record 28% higher account usage than the average Commerce account holder.

While putting the customer in control through an increasing number of payment and access options, we have also maintained tight internal controls and operational efficiency, yielding the kind of margins necessary to maintain profitability.

MERCHANT PROCESSING

Many banks our size and larger have elected to outsource their merchant processing. Commerce, instead, has found opportunity as a value-added provider. While base-rate competition is fierce and often unprofitable, many merchants have the vision to look at the blend of cost, efficiency and service. We work individually with merchants to effectively link their front office and our back office operations.

This year Commerce added the capability to consolidate Visa, MasterCard, American Express and Discover into a single daily report for merchant convenience. Electronic Check Processing, in test now, will allow participating merchants to scan checks at the point of sale, automatically converting them to ACH items for prompt, risk-free payment along with card purchases.

The result of our proven track record of service and innovation has been a 15% increase in purchase volume for 2000.

CREDIT UNDERWRITING AND LENDING

Our success in lending is both a reflection of and a demonstration of the Commerce commitment to our markets. As much as it is an instrument for our growth, it is also an instrument for community growth. We continue to expand our credit underwriting and lending activity without moving outside the super-community we serve.

BUSINESS LENDING

Business loan activity increased at an even more vigorous rate this year than in the preceding year. Loans outstanding system-wide increased 16% for the year 2000, compared to 10% for 1999, while net loan losses remained extraordinarily low at .07% of average loans outstanding, compared to .06% for 1999.

Small business loan growth was a major contributor. During the year, Commerce Bank became the number one SBA lender in Kansas City, based on number of loans made. Our SBA ranking improved to second in Springfield and third in St. Louis.

Our newBusiness Toolspackage targeted to small business owners brings together key services for their financial needs. OurQuickLoansproduct, initiated in one of our major markets in 2000, empowers branches to make small business loans on-site, and has brought in a substantial number of new business lending customers. The majority of these are entirely new customers to the bank, expanding our commercial customer base significantly.

In addition to offering many different commercial loan products, the Capital Markets Group (CMG) continues to focus on investment products and services that help our customers maximize their interest income on operating cash. With new online balance reporting tools and high quality investments, all commercial customers have a full line of options available to meet their cash management needs. The Capital Markets Group serves more than 4,500 customers, including more than 600 community and regional financial institutions, extending the breadth of our service area. CMG handled more than $35 billion in volume during the year.

PRIVATE EQUITY AND VENTURE CAPITAL

Capital for Business, Inc. (CFB), our private equity and venture capital subsidiary, also contributed substantially to our growth during the year by investing in six new companies. In addition, four investments were successfully sold. CFB, through its management of three separate private equity funds, generated $11.5 million in pre-tax income, of which $7.5 million was earned by Commerce Bancshares. Also, CFB opened an office in Chicago to complement its St. Louis and Kansas City operations.

CONSUMER LENDING

Commerce has continued to make dramatic improvements in both the speed and convenience of consumer loans. Visa and MasterCard remain the simplest and fastest lending instruments, but installment loans, mortgages (including home equity loans) and student loans all have been simplified through implementation of new technology.

We maintain our commitment to local colleges and universities as one of the few banks originating and disbursing our own guaranteed student loans. Through flexibility and customized service, Commerce continued this year, as for the past five, to post double digit percentage increases in student loan activity.

Emphasis has been placed on home equity lending and loan balances have increased 14%. Installment loan balances have also increased by an average of over $63 million during 2000.

Internally, the streamlining of back office operations for the bankcard and installment loan groups resulted in more efficient processing and will result in annual savings of $3 million.

Mortgage lending continues to be a key component in our strategy to strengthen our relationships with our retail customers. In 2000, personal mortgage loans grew to a record $1.4 billion in balances, making up 39% of total retail loans. All mortgage lending activities combined contributed $16.3 million in before tax profit. Typically the single largest

financial transaction for most of our retail customers, the mortgage loan, whether a refinance or purchase, offers Commerce a unique opportunity to cross-sell a variety of other banking services.

In the last year, Commerce broadened its customer base by expanding its product line to include government insured FHA and VA loans. With these additions to our existing conventional loan products, Commerce now offers over twenty mortgage programs to meet the varying needs of our customers.

Mortgage lending at Commerce continues to benefit from the strategic use of technology. Automated underwriting enables our sales staff to provide customers immediate approvals at the point of sale, resulting in both an improvement in service and a decrease in operating costs. Through a new internet connection our customers can access loan information previously available only by phone or mail inquiry. We continue to seek creative ways to complement our extensive branch network with the internet to meet our customers’ mortgage needs on their terms.

ASSET MANAGEMENT

The Asset Management area was strengthened this past year to provide not only expanded services, but a new level of commitment within traditional activities. The group continues to assist both individuals and institutions with services ranging from overnight investments to long term equity and asset allocation strategies. Staff investment analysts have been added to free up portfolio managers for additional customer contact, and investment options are continually enhanced. Among new offerings this year are two proprietary investment products: one benchmarked against the S&P 500 and the other a double tax-free fund for Kansas residents. “Best of class” offerings from other fund providers are also available. The company now manages 11 mutual fund alternatives, which have grown over the past 6 years to $1.5 billion.

Asset management revenue grew to $60.1 million for the year. Assets under management (including sweep, repo and trust assets) totaled more than $10 billion, while custody assets totaled $6 billion.

Although the economic climate was unsettled during 2000, our investments performed well against their respective benchmark indices. The Commerce Value Fund gained 16%, compared with a 7% gain for the Russell 1000 Value Index. Other Commerce funds performed favorably as well, including the Commerce Growth and Midcap Growth funds, which beat their benchmark indices by ll% and 6%, respectively, during an overall declining market period.

Through our Commerce Private Banking services we continue to expand our investment management customer base while becoming a true one-stop financial services resource for upper income customers. The private banking loan portfolio grew to more than $186 million in outstandings at year-end.

Asset Management offerings to institutional customers were also enhanced through the expansion of endowment, foundation and employee benefit plan offerings. Especially noteworthy was the rollout of an upgraded 401(k) product that includes full internet access, automated voice response and a wide choice of proprietary and external “best of class” mutual funds. The net result is a highly competitive offering coupled with easy administration and customer convenience.

REGIONAL INVESTMENT SPECIALISTS LIKE SHAREEN BEAL IN SPRINGFIELD, MISSOURI, MAKE SURE THAT COMMERCE BROKERAGE SERVICES MAINTAINS CLOSE TOUCH WITH THOUSANDS OF CLIENTS ON INVESTMENTS FROM IRAS TO INSURANCE.
Shareen BealSenior Vice President, Commerce Brokerage Services, Inc.

Commerce Brokerage Services, Inc. also performed to expectations, achieving financial net income goals for 2000. Within Commerce Bank branches, a network of 28 investment specialists now work with individuals to meet their investment needs. Online account access, online trading and The Premium Asset Management Account were also made available in 2000. This new account offers clients check writing and debit card access to brokerage account assets. In 2001, for the first time, Brokerage investment specialists will offer customers a list of recommended individual stocks.

TECHNOLOGY

Commerce Bank has maintained a consistent approach to the selection and implementation of technology. With the interests of both our customers and our staff in mind, we emphasize ease of access, adaptation and familiarization, as much as function. As a system integrator rather than a developer, we leverage long-term strategic partnerships with vendors offering “best of class” software.

Our investment in robust browser-based intranet and internet systems is paying handsome rewards in both capability and ease of use. The system architecture allows us to develop close partnerships with commercial customers to meet their specific needs and cement long-term relationships.

We are making a significant commitment of both technology and resources to a new call center, slated for introduction in 2001. Intranet screens will allow call center personnel to bring up a complete customer profile for every caller. Activity will thus be proactive as well as simply responsive, focused on identifying and meeting customer needs, as well as expanding the scope of our services. The center will also support web interaction with customers, a contact channel in which volume increased by more than 75% in the past year.

Also using browser technology on our intranet, scanned images of customer signature cards are now available instantly online to branch and operations personnel, speeding customer service and reducing exposure to loss through fraud.

On another front, ATM linkage was successfully converted from dedicated individual lines to our digital WAN (wide area network) system. The project has resulted in more than 98% “uptime” performance, facilitating more than 37 million transactions a year, and yielding savings of $1.4 million annually.

WHAT LIES AHEAD

As in all business, we face both short term and longer term strategic issues as we plan for the future. Immediate concerns in the banking industry center on slower revenue and deposit growth and credit quality issues. But longer term, all financial service institutions should be focused on enlightened use of technology, a motivated and well trained employee base and a consistent business philosophy of partnering with customers to help them and their businesses prosper.

We feel Commerce Bancshares is in an excellent competitive position to continue our record of sustained growth, even in a slower growth economic environment. Your management is strongly focused on creating shareholder value by increasing the underlying value of our franchise. Key components of a successful bank are high asset quality, revenue growth through a growing customer base in our targeted business lines, and continual reinvestment in our people, technology and products. This business format allowed us to complete a very successful 2000, an EPS compounded growth rate of 13.1% over the last five years and a strong position for future growth.

Sincerely,

David W. Kemper, Chairman
Commerce Bancshares, Inc.
February 2, 2001

STEVE O’NEAL IS IN TOUCH IN EASTERN MISSOURI, METRO ST. LOUIS
AND SOUTHERN ILLINOIS. HE AND OTHER REGIONAL MANAGERS USE
THEIR KNOWLEDGE OF THE COMMUNITIES THEY SERVE TO SPUR SOUND
BUSINESS LENDING ACTIVITY, AND TO FOSTER COMMUNITY GROWTH.
Steve O’NealSenior Vice President, Commercial Division Manager

Established in 1973, MBS Textbook Exchange, Inc. supplies textbooks and computer services to university bookstores across the nation from its facility in Columbia, Missouri. As their needs have changed, Commerce Bank has helped the company adapt. When MBS expanded their warehouse, the focal point was a unique robotic,automated storage and retrieval system that allows for thetimely processing and shipment of large volumes of smallquantity orders. This automation provides a solution to the demands of the non-campus learning environment, an environment experiencing rapid growth partially due to the expanding internet. A loan from Commerce helped finance the warehouse expansion and equipment acquisition. Additionally, Commerce Bank’s low-cost, high-service merchant bankcard system guarantees the order payment moves as quickly and smoothly as the automated fulfillment process. The MBS/Commerce relationship beganin 1985, and has grown to include depository, credit and capitalmarket services as well as bankcard and corporate card processing.

WAREHOUSE AUTOMATION SPEEDS ORDER FULFILLMENT AT MBS TEXTBOOK EXCHANGE.
COMMERCE BANK’S CUSTOM MERCHANT BANKCARD
PROCESSING ALLOWS ORDER PAYMENT TO MOVE QUICKLY AS WELL.

The Central Institute for the Deaf in St. Louis provides education, clinical assistance and research to help the deaf and hearing impaired communicate effectively in a hearing world. The challenges they face are imposing. Their progress is even moreimpressive. At Commerce Bank, we are helping. We assistwith direct grants from the Commerce Bank Foundation as apart of our commitment to community, but we also work through our Asset Management area to manage CID endowment funds. Though dedicated to research, clinical advances and education, CID still has to run like a business, and Commerce senior management is positioned to help. We provide additional services from merchant bankcard processing, corporate checking, treasury services and sweep accounts to a substantialworking capital line of credit. The smiles and the sound ofconversation alone are an incredible return on investment.

THE RIGHT ENVIRONMENT FOR LEARNING DEPENDS ON MANY UNSEEN FACTORS.
THE DEVELOPMENT OF FINANCIAL RESOURCES IS ONE OF THE MOST IMPORTANT ONES.

Jack Henry & Associates in Monett, Missouri, specializes in providing banks and credit unions with the technology needed to remain competitive in an evolving financial services marketplace. Commerce Bank provides Jack Henry with the financial services they need toget their job done. The partnership began with a $40 millionline of credit to finance a major acquisition in 1999. Sincethen the line of credit has expanded to keep pace with the company’s tremendous growth, and the relationship has expanded to include daily settlement services for their ATM network of more than 400 banks, and overnight investment options for their clients. Jack Henry product offerings now make even sophisticated e-commerce capabilities available to banks and credit unions for whom independent development is not practical.To deal with the practicalities of their own growth and development,Jack Henry & Associates relies upon the Commerce partnership.

JACK HENRY PRODUCTS CREATE WINDOWS OF OPPORTUNITY
FOR THEIR BANKING AND CREDIT UNION CUSTOMERS.
WHEN JACK HENRY SAW AN OPPORTUNITY FOR A MAJOR CORPORATE ACQUISITION,
THEY SECURED A SUBSTANTIAL LINE OF CREDIT FROM COMMERCE BANK.

Problem-solving is a part of Commerce. For Unigroup, Inc., the parent company for moving giants United Van Lines and Mayflower Transit, the problem lay in paper flow delays for payment authorization, settlement and reconciliation. Van operators (drivers)had satellite links on their trucks for communication andtracking, but the links weren’t used for transactionprocessing. Commerce Bank, already the merchant card processor for Unigroup, has proposed a system for real-time transaction processing, using the existing satellite hookup on vans and adding only a single, inexpensive frame relay circuit to the processing center. Under the proposed system, van operators will accept credit cards on delivery, and get authorization through the van’s satellite hookup. Reduction in non-qualifying transactions alone may pay for the system. Integrated solutions like this are a part of Commerce Bank’s positioning as a value-added provider of merchant cardprocessing, and more generally reflect our commitmentto extraordinary service levels through innovation.

COMMERCE BANK INNOVATION WILL LINK UNIGROUP’S
VAN-MOUNTED SATELLITE COMMUNICATION DEVICES TO A FULLY AUTOMATED
SYSTEM FOR ONLINE TRANSACTION PROCESSING.

Litton Interconnect Technologies, headquartered in Springfield, Missouri, is a leading technology supplier of complex, high-performance backpanel printed circuit boards and assemblies through cabinet level integration. Many of the technologically advanced products made here find their way into the heart of the communications, computingand data networking infrastructure around the world.No surprise, then, that Litton has adopted the highesttechnology in financial services. State-of-the-art treasury management services provided by Commerce Bank allow Litton to achieve maximum productivity of their cash resources. Account security is enhanced through Positive Pay fraud prevention technology. Electronic check imaging makes research and storage of check paid information quick and efficient. Receipt of payments is also expedited through Commerce Bank’s 24-hour, 7-day lockbox operation. And, since Litton Interconnect Technologies operates worldwide, Commerce assists with online international transactions.“Technology. Solutions. Results.” That’s Litton’s mission, butit’s a good description of the Commerce relationship as well.

LITTON INTERCONNECT TECHNOLOGIES PRODUCTS DELIVER LEADING EDGE TECHNOLOGY,
AND COMMERCE BANK DELIVERS STATE-OF-THE-ART TREASURY
MANAGEMENT SERVICES FOR THE SPRINGFIELD, MISSOURI, MANUFACTURER.

THE VALUE OF RELATIONSHIPSDEVELOPED IN THE CONDUCT OF COMMERCE CAN’T BE OVERSTATED. FOR COMMERCE BANK, THIS VALUE IS EXPRESSED IN THE SECURITY AND HEALTHY GROWTH OF THE PEOPLE AND ORGANIZATIONS WE SERVE, AND IN THE DEVELOPMENT OF THE COMMUNITIES IN WHICH WE ALL LIVE AND WORK. NOT COINCIDENTALLY, IT IS ALSO REFLECTED IN THE FINANCIAL STATEMENTS PRESENTED IN THIS REPORT.

COMMERCE BANCSHARES, INC. 2000 FINANCIAL REVIEW

Common Stock Data	Below
Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations	22
Consolidated Financial Statements:
Balance Sheets	42
Statements of Income	43
Statements of Cash Flows	44
Statements of Stockholders’ Equity	45
Notes to Consolidated Financial Statements	46
Independent Auditors’ Report	60
Statement of Management’s Responsibility	61
Summary of Quarterly Statements of Income	62

COMMON STOCK DATA
Commerce Bancshares, Inc. (Parent)

The following table sets forth the high and low prices of actual transactions for the Company’s common stock (CBSH) and cash dividends paid for the periods indicated (restated for the 5% stock dividend distributed in 2000).

					Cash
2000		High		Low	Dividends
First Quarter	$32.86		$25.12		$.148
Second Quarter	34.08		28.10			.148
Third Quarter	35.83		28.33			.148
Fourth Quarter	42.75		33.10			.148
1999
First Quarter	$39.57		$34.01		$.136
Second Quarter		38.89		33.99		.136
Third Quarter		37.53		30.67		.136
Fourth Quarter		37.70		30.83		.136
1998
First Quarter	$42.47		$35.70		$.125
Second Quarter		43.73		38.87		.125
Third Quarter		44.60		33.26		.125
Fourth Quarter		42.22		29.37		.125

Commerce Bancshares, Inc. common shares are publicly traded on The Nasdaq Stock Market (NASDAQ). NASDAQ is a highly-regulated electronic securities market comprised of competing Market Makers whose trading is supported by a communications network linking them to quotation dissemination, trade reporting, and order execution systems. The Company had 5,440 shareholders of record as of December 31, 2000.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONSCommerce Bancshares, Inc. and Subsidiaries

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes. The historical trends reflected in the financial information presented below are not necessarily reflective of anticipated future results.

KEY RATIOS
		2000			1999			1998			1997			1996
(Based on average balance sheets):
Return on total assets		1.62	%		1.50	%		1.43	%		1.37	%		1.28	%
Return on stockholders’ equity		16.22			15.40			14.58			14.08			13.40
Efficiency ratio		57.63			58.53			58.30			58.24			58.76
Loans to deposits		87.26			77.94			75.24			70.93			67.07
Net yield on interest earning assets (tax equivalent basis)		4.74			4.61			4.56			4.61			4.40
Non-interest bearing deposits to total deposits		14.89			14.82			18.50			21.35			19.65
Equity to total assets		9.99			9.72			9.83			9.74			9.53
Cash dividend payout ratio		21.38			22.05			22.81			23.24			23.28
SELECTED FINANCIAL DATA
(In thousands, except per share data)		2000			1999			1998			1997			1996
Net interest income	$	480,653		$	466,001		$	427,745		$	397,774		$	365,743
Provision for loan losses		35,159			35,335			36,874			31,354			24,522
Non-interest income		252,808			236,209			214,037			180,092			159,162
Non-interest expense		430,381			419,015			379,344			344,450			317,954
Net income		178,574			166,213			150,091			132,702			119,512
Net income per share – basic*		2.79			2.50			2.23			1.96			1.72
Net income per share – diluted*		2.76			2.47			2.19			1.93			1.71
Total assets		11,115,117			11,400,936			11,402,023			10,306,941			9,698,186
Loans		7,906,665			7,576,892			7,046,852			6,224,381			5,472,342
Investment securities		1,940,903			2,508,415			3,031,716			2,664,931			2,721,515
Deposits		9,081,738			9,164,123			9,530,197			8,700,578			8,166,429
Long-term debt		124,684			25,735			27,130			7,102			14,120
Stockholders’ equity		1,143,755			1,079,832			1,080,785			980,784			924,271
Cash dividends per common share*		.590			.544			.501			.450			.397
*Restated for the 5% stock dividend distributed in 2000.

RESULTS OF OPERATIONS
		$ Change					% Change
(Dollars in thousands)		’00-’99			’99-’98		’00-’99		’99-’98
Net interest income	$	14,652		$	38,256		3.1	%	8.9	%
Provision for loan losses		(176	)		(1,539	)	(.5	)	(4.2	)
Non-interest income (excluding securities gains)		16,950			28,174		7.2		13.6
Net gains on securities transactions		(351	)		(6,002	)	(39.3	)	(87.1	)
Non-interest expense		11,366			39,671		2.7		10.5
Income taxes		7,700			6,174		9.4		8.2
Net income	$	12,361		$	16,122		7.4	%	10.7	%

The Company achieved its 10th consecutive year of record earnings in 2000, with net income of $178.6 million. This was a 7.4% increase over net income in 1999. Diluted earnings per share was $2.76, an increase of 11.7% over 1999. The return on average assets was 1.62%, and the return on equity was 16.22%. The increase in net income resulted from 3.1% growth in net interest income, 7.2% growth in non-interest income (excluding securities gains) and flat credit costs, partly offset by non-interest expense, which was controlled to a 2.7% increase. Net interest income increased $14.7 million over last year mainly due to average loan growth of $585.2 million coupled with increased earning assets rates. Interest rate increases by the Federal Reserve late in 1999 and early in 2000 allowed a substantial portion of the loan portfolio to reprice rapidly, resulting in higher earnings rates. Also, loan growth was mainly funded by maturities of investment securities which generally yield lower rates than loans, thus creating a more profitable asset mix. Non-interest income rose $16.6 million, mainly in the areas of credit card fees, trust revenues, and gains realized on venture capital activity. Non-interest expense grew $11.4 million, partly due to increases in occupancy, data processing expense, and a substantial charitable contribution. Salaries and benefits, which account for approximately half of total non-interest expense, rose $5.4 million, or 2.5%, over 1999. Costs were also well-controlled in several other expense areas, including equipment, supplies and communication, and marketing.

Net income in 1999 was $166.2 million, which was a $16.1 million, or 10.7%, increase over 1998. Diluted earnings per share increased

12.8% to $2.47 compared to $2.19 in 1998. The return on average assets was 1.50% and the return on equity was 15.40%. Net interest income increased $38.3 million, or 8.9%, due in part to average loan growth of 9.4% and lower deposit costs. Loan growth was funded partly by average deposit growth of 5.6%. The provision for loan losses decreased $1.5 million from 1998, but exceeded 1999 net charge-offs by 20%. Non-interest income grew $22.2 million, mainly from growth in trust, deposit account and credit card fees. Non-interest expense increased $39.7 million largely because of higher salaries and data processing costs.

On October 23, 2000, the Company announced the approval of a definitive agreement to acquire Breckenridge Bancshares Company and its subsidiary, Centennial Bank, for 876,750 shares of Commerce stock. The bank has three locations in the St. Louis area, with assets of $260 million. The transaction is expected to close in the first quarter of 2001. It will be accounted for as a pooling of interests transaction, and is not expected to have a material impact on the financial statements of the Company.

During 1998, the Company acquired four banks located in Kansas, with combined assets of approximately $430 million and 15 new locations. Stock valued at $84.0 million was issued and these acquisitions were recorded under the pooling of interests method of accounting. Prior year financial results were not restated for these poolings because those restated amounts did not differ materially from the Company’s historical operating results.

During 2000, the Company sold various assets and liabilities of four bank branches during the year as part of a continuing process of evaluating profit potential in the branch network. Pre-tax gains of $5.9 million were realized on these sales, which included loans of $42.7 million and deposits of $71.5 million. In 1999, the Company also sold two branches with $1.6 million in loans and $29.9 million in deposits. Pre-tax gains of $2.8 million were realized on these transactions.

The Company distributed a 5% stock dividend for the seventh consecutive year on December 15, 2000. All per share and average share data in this report has been restated to reflect the stock dividend.

NET INTEREST INCOMENet interest income, the largest source of revenue, results from the Company’s lending, investing, borrowing, and deposit gathering activities. It is affected by both changes in the level of interest rates and changes in the amounts and mix of interest earning assets and interest bearing liabilities. The following table summarizes the changes in net interest income on a fully taxable equivalent basis, by major category of interest earning assets and interest bearing liabilities, identifying changes related to volumes and rates. Changes not solely due to volume or rate changes are allocated to rate. Management believes this allocation method, applied on a consistent basis, provides meaningful comparisons between the respective periods.

					2000									1999
		Change due to									Change due to
		Average		Average						Average				Average
(In thousands)		Volume		Rate				Total		Volume				Rate			Total
INTEREST INCOME,
FULLY TAXABLE EQUIVALENT BASIS
Loans	$	44,996		$	44,083		$	89,079		$	49,349		$	(28,790	)	$	20,559
Investment securities:
U.S. government and federal agency securities		(21,019	)		1,640			(19,379	)		(9,542	)		(1,942	)		(11,484	)
State and municipal securities		(1,529	)		(103	)		(1,632	)		(584	)		(52	)		(636	)
CMO’s and asset-backed securities		(7,910	)		441			(7,469	)		17,766			(1,516	)		16,250
Other securities		(962	)		901			(61	)		(1,309	)		159			(1,150	)
Federal funds sold and securities purchased
under agreements to resell		(3,026	)		3,246			220			(299	)		(1,185	)		(1,484	)
Total interest income		10,550			50,208			60,758			55,381			(33,326	)		22,055
INTEREST EXPENSE
Interest bearing deposits:
Savings		(349	)		82			(267	)		441			(2,027	)		(1,586	)
Interest bearing demand		(2,932	)		21,316			18,384			13,132			(21,891	)		(8,759	)
Time open and C.D.’s of less than $100,000		(5,841	)		8,166			2,325			(1,428	)		(7,296	)		(8,724	)
Time open and C.D.’s of $100,000 and over		1,696			2,007			3,703			2,134			(1,275	)		859
Federal funds purchased and securities
sold under agreements to repurchase		7,975			9,162			17,137			4,350			(2,350	)		2,000
Long-term debt and other borrowings		2,601			3,128			5,729			522			(132	)		390
Total interest expense		3,150			43,861			47,011			19,151			(34,971	)		(15,820	)
Net interest income, fully taxable equivalent basis	$	7,400		$	6,347		$	13,747		$	36,230		$	1,645		$	37,875

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS[CONT.]

Net interest income was $480.7 million in 2000, $466.0 million in 1999 and $427.7 million in 1998. Compared to the prior year, net interest income increased $14.7 million, or 3.1%, in 2000 and increased $38.3 million, or 8.9%, in 1999. The increase in 2000 compared to 1999 was mainly due to continued loan growth, coupled with improved loan yields. Loan growth was largely funded by maturities of investment securities, which improved the mix of higher earning assets. This effect was partly offset by an increase of 57 basis points in average rates paid on interest bearing liabilities, which was a reversal of the rate decline seen during 1999. The increase in net interest income in 1999 compared to 1998 was also fueled by loan growth, along with a decline in rates paid on interest bearing liabilities. These increases to net interest income were partially offset by an increase in average interest bearing liabilities and a decline in loan yields. The net yield on earning assets was 4.74% in 2000, 4.61% in 1999 and 4.56% in 1998. Average interest earning assets rose slightly in 2000 over 1999, compared to a 7.5% increase in 1999 over 1998. Average interest bearing liabilities decreased slightly in 2000 compared to an 11.0% increase in 1999.

Tax equivalent interest income was $815.5 million in 2000, $754.7 million in 1999 and $732.7 million in 1998; and represented an increase of $60.8 million, or 8.1%, in 2000 and an increase of $22.1 million, or 3.0%, in 1999. In 2000, average loan balances grew $585.2 million, or 8.1%, with a corresponding decline in investment securities of $510.6 million. Loan yields improved 54 basis points, with the largest increase occurring in the business loan category. During 2000, loans composed 77% of average interest earning assets, investment securities composed 21%, and short-term federal funds sold and securities purchased under agreements to resell composed 2%. During 1999, average loan balances increased $620.0 million, or 9.4%. In addition, average investments in CMO’s and asset-backed securities increased $281.6 million, reflecting a shift from lower-yielding U.S. government securities. Counteracting these effects was a decline of 44 basis points in average rates earned on loans, which occurred mainly in the business and personal banking categories.

Total interest expense was $331.5 million in 2000, $284.6 million in 1999 and $300.7 million in 1998. Interest expense increased $46.9 million, or 16.5%, over 1999 because of higher average rates paid on interest bearing deposits and short-term borrowings. The largest rate effect occurred in the Company’s Premium Money Market deposit accounts, with a 93 basis point increase during the year. Average rates paid on C.D.’s under $100,000 increased 39 basis points. Both average balancesand rates paid on short-term borrowings rose during 2000. Partly offsetting these increases was a 3.5% decline in average interest bearing deposit balances. In 1999, interest expense decreased $16.1 million, or 5.4%, compared to 1998. Interest expense on deposits decreased mainly because of declines in rates paid on interest bearing demand deposits (60 basis points) and C.D.’s under $100,000 (37 basis points). These effects were partly offset by a $275.7 million increase in average Premium Money Market deposit account balances. Premium and other money market deposits represented 60% of total average interest bearing deposits in 2000 and 1999.

ALLOWANCE FOR LOAN LOSSES

The Company has an established process to determine the amount of the allowance for loan losses, which assesses the risks and losses inherent in its portfolio. This process provides an allowance consisting of an allocated and unallocated component. To determine the allocated component of the allowance, the Company combines estimates of the allowances needed for loans reviewed on an individual basis with estimates of reserves needed for pools of loans reviewed.

Loans subject to individual review generally consist of commercial and commercial real estate loans. These loans are analyzed and segregated by risk according to the Company's "watch list", which is an internal risk rating system. Loans judged to contain the highest risk are reviewed individually for repayment potential and collateral adequacy, and in conjunction with current economic conditions and loss experience, allowances are estimated. Other loans identified on the Company's "watch list", but not individually reviewed, are pooled and allowances are established using migration models, which track actual portfolio movements from problem asset loan grades to loss over a 5 to 10 year period. In the case of other more homogeneous loan portfolios, including auto loans, residential mortgages, home equity loans and credit card loans, the determination of the allocated reserve is computed on a pooled basis. For these loan pools, historical loss ratios by loan type, current loss and past due experience, and management's judgment of recent and forecasted economic effects on portfolio performance are factors utilized to determine the appropriate reserve amounts.

To mitigate the imprecision inherent in estimates of expected credit losses, the allocated component of the allowance is supplemented by an unallocated component. This portion of the allowance includes management's determination of the amounts necessary for loan concentrations, economic uncertainties and subjective factors, and as such, the relationship of the unallocated component of the total allowance for loan losses may fluctuate from period to period. Although management has allocated a portion of the allowance to specific loan categories, the adequacy of the allowance must be considered in its entirety.

The Company's estimate of the allowance for loan losses and the corresponding provision for loan losses rests upon various judgments and assumptions made by management. Factors which influence these judgments include past loan loss experience, current loan portfolio mix, prevailing regional and national economic conditions, and the Company's ongoing examination process by its regulators. The Company has an internal loan review staff that continuously reviews loan quality and reports the results of its examinations to the Company's senior management and Board of Directors. Such reviews also assist management in establishing the level of the allowance. The Company's subsidiary banks continue to be subject to examination by the Office of the Comptroller of the Currency (OCC) and examinations are conducted throughout the year targeting various segments of the loan portfolio for review. In addition to the subsidiary banks being examined by the OCC, the Parent and its non-bank subsidiaries are examined by the Federal Reserve Bank.

The allowance for loan losses was 1.62% of loans outstanding at December 31, 2000 and 1999. The allowance for loan losses at year end covered non-performing assets (defined as non-accrual loans and foreclosed real estate) by 602%. Net charge-offs totaled $29.8 million in 2000 compared to $29.4 million in 1999. The ratio of net charge-offs to average loans outstanding in 2000 was .38% compared to .41% in 1999 and .48% in 1998. The provision for loan losses was $35.2 million, exceeding 2000 net charge-offs by $5.4 million, compared to a provision of $35.3 million in 1999 and $36.9 million in 1998. The allowance at year end 2000 represented a 4.3 times multiple of net loan losses for the year just ended.

Credit card loans outstanding at December 31, 2000 amounted to $524.9 million, or 6.6% of total loans. Net charge-offs on these loans decreased to 3.17% of average credit card loans in 2000 compared to 3.28% in 1999. This decline in net charge-offs was consistent with industry trends when compared with 1999, but the Company's net charge-off experience for its credit card portfolio has been significantly better than industry averages. Delinquency trends rose in the fourth quarter of 2000 for both the Company and the industry but the Company is still well below industry delinquency averages. The Company considers the allowance for loan losses of $128.4 million adequate to cover losses inherent in loans at December 31, 2000.

The schedule which follows summarizes the relationship between loan balances and activity in the allowance for loan losses:

			Years Ended December 31
(Dollars in thousands)	2000		1999		1998		1997		1996
Net loans outstanding at end of year (A)	$7,906,665		$7,576,892		$7,046,852		$6,224,381		$5,472,342
Average loans outstanding (A)	$7,802,041		$7,216,867		$6,596,831		$5,815,192		$5,321,584
Allowance for loan losses:
Balance at beginning of year	$  123,042		$  117,092		$105,918		$    98,223		$    98,537
Additions to allowance through charges to expense	35,159		35,335		36,874		31,354		24,522
Allowances of acquired banks	–		–		5,808		4,275		–
Loans charged off:
Business	7,027		7,444		7,827		5,734		4,912
Construction	32		544		211		300		–
Business real estate	1,162		624		212		113		205
Personal real estate	322		933		279		401		341
Personal banking	12,887		10,544		10,372		8,472		9,327
Credit card	19,896		20,449		23,465		23,163		17,129
Total loans charged off	41,326		40,538		42,366		38,183		31,914
Recovery of loans previously charged off:
Business	2,419		2,540		2,578		2,992		1,739
Construction	150		110		402		340		–
Business real estate	73		337		651		500		416
Personal real estate	128		251		83		70		123
Personal banking	4,699		3,898		3,533		3,420		2,628
Credit card	4,101		4,017		3,611		2,927		2,172
Total recoveries	11,570		11,153		10,858		10,249		7,078
Net loans charged off	29,756		29,385		31,508		27,934		24,836
Balance at end of year	$  128,445		$  123,042		$  117,092		$  105,918		$   98,223
Ratio of net charge-offs to average loans outstanding	.38	%	.41	%	.48	%	.48	%	.47	%
Ratio of allowance to loans at end of year	1.62	%	1.62	%	1.66	%	1.70	%	1.79	%
Ratio of provision to average loans outstanding	.45	%	.49	%	.56	%	.54	%	.46	%

(A)          Net of unearned income; before deducting allowance for loan losses

The following schedule provides a breakdown of the allowance for loan losses by loan category and the percentage of each loan category to total loans outstanding at year end:

(Dollars in thousands)	2000		1999		1998		1997		1996
	Loan loss allowance allocation	% of loans	Loan loss allowance allocation	% of loans	Loan loss allowance allocation	% of loans	Loan loss allowance allocation	% of loans	Loan loss allowance allocation	% of loans
Business	$36,147	33.6%	$33,810	33.8%	$30,817	35.0%	$25,807	33.0%	$20,948	31.1%
Construction	4,232	4.8	4,253	4.7	4,165	4.6	3,493	3.7	2,520	3.3
Business real estate	19,614	16.5	18,416	16.5	15,358	14.2	14,652	14.9	14,914	13.9
Personal real estate	3,335	17.7	3,300	18.2	3,162	18.6	3,031	18.5	5,006	18.4
Personal banking	16,413	20.8	15,426	19.9	14,080	20.0	12,007	21.1	12,084	23.0
Credit card	19,504	6.6	19,637	6.9	22,310	7.6	22,928	8.8	18,251	10.3
Unallocated	29,200	-	28,200	-	27,200	-	24,000	-	24,500	-
Total	$128,445	100.0%	$123,042	100.0%	$117,092	100.0%	$105,918	100.0%	$98,223	100.0%

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS[CONT.]

NON-INTEREST INCOME

										% Change
(Dollars in thousands)		2000			1999			1998		’00-’99		’99-’98
Trust fees	$	58,588		$	55,773		$	50,460		5.0	%	10.5	%
Deposit account charges and other fees		71,025			68,538			63,145		3.6		8.5
Credit card transaction fees		51,453			44,466			36,786		15.7		20.9
Trading account profits and commissions		8,594			10,310			8,733		(16.6	)	18.1
Brokerage, mutual funds and annuities fees		9,077			8,992			7,239		.9		24.2
Net gains on sales of loans		7,247			8,677			9,919		(16.5	)	(12.5	)
Net gains on securities transactions		541			892			6,894		(39.3	)	(87.1	)
Other		46,283			38,561			30,861		20.0		25.0
Total non-interest income	$	252,808		$	236,209		$	214,037		7.0	%	10.4	%
Total non-interest income excluding net    gains on securities transactions
	$	252,267		$	235,317		$	207,143		7.2	%	13.6	%
Non-interest income as a % of operating income*		34.5	%		33.6	%		33.4	%
Operating income per full-time equivalent employee	$	144.5		$	133.0		$	123.3
*Operating income is defined as net interest income plus non-interest income.

Non-interest income totaled $252.8 million in 2000, which was a $16.6 million, or 7.0%, increase over 1999. Increased credit card transaction fees accounted for $7.0 million of the increase. These fees were higher due to stronger merchant and cardholder sales volumes, and an increase in debit card transactions. Trust fees increased $2.8 million, or 5.0%, in 2000 due to account growth, increases in the value of assets managed, and competitive pricing adjustments made in the third quarter of 2000. The aggregate value of managed assets was $10.1 billion at year end 2000 compared to $9.8 billion at year end 1999. Custodial trust assets totaled $6.1 billion at year end 2000. Deposit account charges increased $2.5 million, continuing last year’s improvement in overdraft fee collection. Other significant items contributing to non-interest income were $3.1 million in additional gains on the sales of banking branches, and growth in cash management fee production. A venture capital partnership in which the Company participates realized significant gains on investment sales in both 2000 and 1999, as described below. Partially offsetting these increases was a $1.7 million decline in trading account profits, which were negatively impacted by lower demand from financial institution customers who had less liquidity to purchase investments. In addition, gains on the sales of personal mortgage loans, which are sold to secondary investors, declined $1.3 million compared to the previous year. Net gains on securities transactions in 2000 decreased slightly compared to the previous year.

Non-interest income grew to $236.2 million in 1999, an increase of 10.4% over 1998. Credit card fee income increased $7.7 million, or 20.9%, over 1998 because of growth in transaction volumes in both merchant andcardholder businesses, transaction pricing changes, and strong increases in fees charged on debit card transactions. Trust fees grew $5.3 million, or 10.5%, because of account growth and increases in the value of assets managed, especially in the personal trust area. Deposit account fees increased $5.4 million over 1998 mainly due to growth in overdraft fee income. Fees collected from the sales of mutual funds and annuities increased $1.5 million, or 28.4%, over 1998. Other non-interest income increased mainly due to gains on investment sales realized by a venture capital partnership, as described below. This category also increased due to gains on sales of banking branches and higher cash management fee income. A loss on the sale of a housing development partnership partially reduced these increases. Compared to 1998, lower gains were recorded on sales of mortgage loans, which were partly offset by higher gains on student loan sales. Net gains on securities transactions were $6.0 million lower in 1999 than in 1998.

Shown below is a summary of realized gains and losses on securities transactions recorded by the Parent and its consolidated subsidiaries. It also shows investment activity recorded in other non-interest income which related to an unconsolidated venture capital partnership in which the Company participates.

(In thousands)		2000			1999			1998
Gains (losses) on    securities transactions:
Parent	$	237		$	(53	)	$	1,101
Bank subsidiaries	(3,072		)		945			1,634
Venture capital subsidiary		3,376			–			4,154
Other non-bank subsidiaries		–			–			5
Total	$	541		$	892		$	6,894
Other non-interest income	$	3,947		$	3,865		$	218

NON-INTEREST EXPENSE

							% Change
(Dollars in thousands)	2000		1999		1998		’00-’99		’99-’98
Salaries	$191,613		$185,866		$172,835		3.1	%	7.5	%
Employee benefits	29,043		29,351		25,255		(1.0	)	16.2
Net occupancy	30,381		27,950		23,805		8.7		17.4
Equipment	20,673		20,612		18,148		.3		13.6
Supplies and communication	34,048		33,800		29,867		.7		13.2
Data processing	39,620		36,966		32,148		7.2		15.0
Marketing	13,274		12,915		12,206		2.8		5.8
Goodwill and core deposit premium	8,016		8,528		9,193		(6.0	)	(7.2	)
Other	63,713		63,027		55,887		1.1		12.8
Total non-interest expense	$430,381		$419,015		$379,344		2.7	%	10.5	%
Efficiency ratio (non-interest expense as a % of operating
income, excluding net gains on securities transactions
and goodwill/core deposit premium amortization)	57.6	%	58.5	%	58.3	%
Salaries and benefits as a % of total non-interest expense	51.3	%	51.4	%	52.2	%
Number of full-time equivalent employees	5,076		5,278		5,206

Non-interest expense was $430.4 million in 2000, which represented a 2.7% increase over 1999. Salaries and employee benefits, the largest components of non-interest expense, were well-controlled during 2000. Salary increases were held to a 3.1% increase in 2000 compared to a 7.5% increase in 1999, and employee benefits decreased slightly in 2000, compared to a 16.2% increase in 1999. The rise in salary expense was due to additional employee incentive payments and merit increases. This rise was partly offset by a reduction in full-time equivalent employees of over 200 due to lower contract programmer staffing, and a reduction in retail branch facilities, as mentioned earlier. The benefits decrease occurred because of a reduction in pension plan expense, resulting from lower service cost benefits earned and increases in the value of plan assets. Occupancy expense rose $2.4 million over 1999, mainly due to lower outside tenant revenues associated with a Kansas City office building renovation currently in process. Data processing expense increased $2.7 million over 1999, mainly because of higher PC banking costs, and volume related processing fees, which increase with growth in customers, products, and services. The increase in other non-interest expense was partly due to the contribution of appreciated securities to a charitable organization, and lower costs deferred in connection with loan originations. Partially offsetting these increases was a reduction in professional and consulting fees.

Non-interest expense amounted to $419.0 million in 1999, which was a $39.7 million, or 10.5%, increase over 1998. Non-interest expense increased in 1999 mainly in salaries and employee benefits, data processing, occupancy, supplies, and several other expense areas. Additional employees,merit increases, and contract programming contributed to a salary increase of 7.5% over the prior year. Increased costs for medical insurance, employment taxes, pension and 401K expense contributed to higher employee benefits. Occupancy expense increased $4.1 million compared to 1998 because of additional office space rented, lower outside tenant rent income, and higher building repairs and maintenance costs. Supplies and communication expense grew $3.9 million over 1998, and included increases in telephone costs and general office supplies related to a new data processing contract. Data processing costs increased 15.0% over the previous year, mainly due to higher charges by information service providers. The increase in other non-interest expense occurred partly because of higher fees paid for professional and consulting services incurred during the year, some of which were Year 2000 related.

INCOME TAXESIncome tax expense was $89.3 million in 2000, compared to $81.6 million in 1999 and $75.5 million in 1998. Income tax expense increased 9.4% over 1999, compared to an 8.1% increase in pre-tax income. The effective tax rate on income from operations was 33.3%, 32.9% and 33.5% in 2000, 1999 and 1998, respectively. The effective tax rates were lower than the federal statutory rate of 35% mainly due to various tax initiatives undertaken by the Company and tax exempt interest on state and municipal obligations. In addition, in 2000, appreciated securities were contributed to a charitable organization in exchange for state tax credits, which resulted in a $2.0 million tax reduction. These factors were partly offset by higher state and local income taxes and non-deductible goodwill amortization.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS[CONT.]

FINANCIAL CONDITION
LOAN PORTFOLIO ANALYSISA schedule of average balances invested in each category of loans appears on page 38. Classifications of consolidated loans by major category at December 31 for each of the past five years are as follows:

		Balance at December 31
(In thousands)	2000		1999	1998	1997	1996
Business	$2,659,511		$2,564,476	$2,464,168	$2,056,862	$1,700,678
Real estate – construction	377,629		354,351	325,360	233,209	182,474
Real estate – business	1,305,397		1,247,956	1,000,380	926,107	758,650
Real estate – personal	1,397,770		1,377,903	1,315,041	1,148,236	1,010,572
Personal banking	1,641,473		1,510,380	1,409,022	1,311,081	1,256,684
Credit card	524,885		521,826	532,881	548,886	563,284
Total loans, net of unearned income	$7,906,665		$7,576,892	$7,046,852	$6,224,381	$5,472,342
The contractual maturities of loan categories at December 31, 2000, and a breakdown of those loans between predetermined rate and floating rate loans are as follows:

	Principal Payments Due
	In One Year or Less	After One Year Through Five Years	After Five Years	Total
Business	$1,689,976	$  867,664	$   101,871	$2,659,511
Real estate - construction	199,424	156,528	21,677	377,629
Real estate - business	344,961	828,326	132,110	1,305,397
Real estate - personal	125,243	267,125	1,005,402	1,397,770
Total	$2,359,604	$2,119,643	$1,261,060	$5,740,307
Personal banking (1)				1,641,473
Credit card (2)				524,885
Total loans, net of unearned income				$7,906,665
Loans with predetermined rate	$1,034,505	$1,241,699	$361,592	$2,637,796
Loans with floating rate	1,325,099	877,944	899,468	3,102,511
Total	$2,359,604	$2,119,643	$1,261,060	$5,740,307

(1)	Personal banking loans with floating rate totaled $614,102,000.
(2)	Credit card loans with floating rate totaled $432,558,000.

Total loans grew $329.8 million, or 4.4%, during 2000 compared to growth of $530.0 million, or 7.5%, during 1999. The growth in 2000 came principally from personal banking, business real estate, and business loans, which grew 8.7%, 4.6% and 3.7%, respectively. The growth during these years was influenced by the effects of a strong economy throughout many of the markets the Company serves. Additionally, other banking consolidations in a number of the markets provided the Company an opportunity to establish new customer relationships.

The Company currently generates approximately 29% of its loan portfolio in the St. Louis regional market and 30% in the Kansas City regional market. The portfolio is diversified from a business and retail standpoint, with 55% in loans to business and 45% in loans to individual consumers. A balanced approach to loan portfolio management and an aversion toward credit concentrations, from an industry, geographic and product perspective, have enabled the Company to sustain low levels of problem loans and loan losses.

Loans by type as a percentage of total loans follows:

	December 31
	2000		1999
Business	33.6	%	33.8	%
Real estate – construction	4.8		4.7
Real estate – business	16.5		16.5
Real estate – personal	17.7		18.2
Personal banking	20.8		19.9
Credit card	6.6		6.9
Total loans	100.0	%	100.0	%

BUSINESS LOANSTotal business loans amounted to $2.66 billion at December 31, 2000, compared to $2.56 billion at December 31, 1999, an increase of $95.0 million, or 3.7%. The growth came predominately from portfolio increases in the Kansas City and St. Louis markets. This group of loans is comprised primarily of loans to customers in the regional trade area of the bank subsidiaries in the central Midwest, encompassing the states of Missouri, Kansas, Illinois and adjacent Midwestern markets. The bank subsidiaries generally do not participate in credits of

large, publicly traded companies unless business operations are maintained in the local communities or regional markets and opportunities to provide other banking services are present. The portfolio is diversified from an industry standpoint and includes businesses engaged in manufacturing, wholesaling, retailing, agribusiness, insurance, financial services, public utilities, and other service businesses. Emphasis is upon middle-market and community businesses with known local management and financial stability. Consistent with management’s strategy and emphasis upon relationship banking, most borrowing customers also maintain deposit accounts and utilize other banking services. There were net loan charge-offs in this category of $4.6 million in 2000 compared to $4.9 million in 1999. Non-accrual business loans increased to $9.6 million (.4% of business loans) at December 31, 2000, compared to $6.4 million (.2% of business loans) at December 31, 1999. Continued growth in business loans will be based upon strong solicitation efforts in a highly competitive market environment for quality loans. Asset quality is, in part, a function of management’s consistent application of underwriting standards. Therefore, portfolio growth in 2001 is dependent upon 1) the strength of the economy, 2) the actions of the Federal Reserve with regard to targets for economic growth, interest rates, and inflationary tendencies, and 3) the competitive environment as previously described.

REAL ESTATE-CONSTRUCTIONThe portfolio of loans in this category amounted to $377.6 million at December 31, 2000, compared to $354.4 million at year end 1999, reflecting growth of $23.3 million, or 6.6%. Non-accrual loans in this category decreased to $1.8 million at year end 2000 compared to $2.5 million at year end 1999. The portfolio consists of residential construction, commercial construction and land development loans, predominantly in the local markets of the Company’s banking subsidiaries. Commercial construction loans are for small and medium-sized office and medical buildings, manufacturing and warehouse facilities, strip shopping centers, and other commercial properties. Exposure to larger speculative office and rental space remains low. Residential construction and land development loans are primarily located in the Kansas City and St. Louis metropolitan areas. The Company experienced $118 thousand net recoveries in 2000 and $434 thousand net charge-offs in 1999. Management is not aware of any significant adverse exposure in this category.

REAL ESTATE-BUSINESSTotal business real estate loans were $1.31 billion at December 31, 2000, reflecting growthof $57.4 million, or 4.6%. Again, the growth came from the Company’s major markets in Missouri, Kansas and Illinois. At December 31, 2000, non-accrual balances amounted to $7.9 million, or .6% of the loans in this category, compared to $3.6 million at year end 1999. The Company experienced net charge-offs of $1.1 million in 2000 and $287 thousand in 1999. This category includes mortgage loans secured by commercial properties which are primarily located in the local and regional markets of the affiliate banks. The economic conditions in local markets are generally strong, positively impacting debt service capabilities and collateral values for both owner-occupied and investment real estate. Significant deterioration is not anticipated in 2001.

REAL ESTATE-PERSONALThe mortgage loans in this category are extended, predominantly, for owner-occupied residential properties. At December 31, 2000, there were $1.40 billion in loans outstanding compared to $1.38 billion at December 31, 1999, reflecting an increase of $19.9 million, or 1.4%. The Company typically does not experience significant problem credits in this category. There were net charge-offs of $194 thousand in 2000 compared to $682 thousand in 1999. The non-accrual balances of loans in this category decreased to $264 thousand at December 31, 2000, compared to $373 thousand at year end 1999. The five year history of net charge-offs on the real estate-personal loan category reflects nominal losses, and credit quality is considered to be strong.

PERSONAL BANKINGTotal personal banking loans were $1.64 billion at December 31, 2000, and reflected growth of $131.1 million, or 8.7%, over the previous year. Net charge-offs were $8.2 million in 2000 compared to $6.6 million in 1999. The majority of personal banking loan losses were related to indirect paper purchases generally secured by automobiles. The personal banking loan portfolio consists of both secured and unsecured loans to individuals for various personal reasons such as automobile financing, securities purchases, home improvements, recreational and educational purposes. This category also includes $219.7 million of home equity loan balances at December 31, 2000, with an additional $341.6 million in unused lines of credit that can be drawn at the discretion of the borrower. These home equity lines are secured by first or second mortgages on residential property of the borrower. The underwriting terms for the home equity line product permit borrowing availability, in the aggregate, generally up to 80% of the appraised value of the collateral property. Given reasonably

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS[CONT.]

stable real estate values over time, the collateral margin improves with the regular amortization of prior mortgage loans. Approximately 37% of the loans in the personal banking category are extended on a floating interest rate basis.

CREDIT CARDTotal credit card loans amounted to $524.9 million at December 31, 2000, compared to $521.8 million at December 31, 1999. The credit card portfolio is concentrated within regional markets served by the Company. Over 58% of the households in Missouri that own a Commerce credit card product also maintain a deposit relationship with a subsidiary bank. The Company has a variety of credit card products which offer ATM access to either advances against the credit card account or transactions against related deposit accounts. Approximately 82% of the outstanding credit card loans have a floating interest rate. Net charge-offs amounted to $15.8 million in 2000, which was a $637 thousand decrease from 1999. The decline in losses was consistent with lower delinquency and bankruptcy levels, following industry trends. The net charge-off ratios of 3.2% in 2000 and 3.3% in 1999 remain well below national averages. The Company refrains from national pre-approved mailing techniques which have caused some of the credit card problems experienced by other banking companies. Current delinquency ratios are higher than in 1999, indicating that losses may be higher in 2001 than in2000. Significant changes in loss trends are not currently anticipated by management.

RISK ELEMENTS OF LOAN PORTFOLIOManagement reviews the loan portfolio continuously for evidence of problem loans. During the ordinary course of business, management becomes aware of borrowers that may not be able to meet the contractual requirements of loan agreements. Such loans are placed under close supervision with consideration given to placing the loan on non-accrual status, the need for additional allowance for loan loss, and (if appropriate) partial or full charge-off. Those loans on which management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment (generally, loans that are 90 days past due as to principal and/or interest payments) are placed on non-accrual status. After a loan is placed on non-accrual status, any interest previously accrued but not yet collected is reversed against current income. Interest is included in income after the loan is placed on non-accrual status only as interest is received and so long as management is satisfied there is no impairment of collateral values. The loan is returned to accrual status only when the borrower has brought all past due principal and interest payments current and, in the opinion of management, the borrower has demonstrated the ability to make future payments of principal and interest as scheduled.

The following schedule shows non-performing assets and loans past due 90 days and still accruing interest.

							December 31
(Dollars in thousands)		2000			1999			1998			1997			1996
Non-accrual:
Business	$	9,598		$	6,362		$	6,590		$	15,125		$	6,978
Real estate – construction		1,834			2,541			7,168			1,944			552
Real estate – business		7,854			3,644			2,787			4,314			4,373
Real estate – personal		264			373			947			1,888			1,911
Personal banking		67			59			339			111			131
Total non-accrual		19,617			12,979			17,831			23,382			13,945
Real estate acquired in foreclosure		1,707			1,347			2,521			994			1,136
Total non-performing assets	$	21,324		$	14,326		$	20,352		$	24,376		$	15,081
Non-performing assets as a percentage of total loans		.27	%		.19	%		.29	%		.39	%		.28	%
Non-performing assets as a percentage of total assets		.19	%		.13	%		.18	%		.24	%		.16	%
Past due 90 days and still accruing interest:
Business	$	5,194		$	4,428		$	7,721		$	6,419		$	5,647
Real estate – construction		215			1			500			580			2,138
Real estate – business		447			1,202			1,797			2,857			1,021
Real estate – personal		5,499			3,771			3,426			3,637			3,923
Personal banking		7,238			5,603			4,327			3,116			5,414
Credit card		8,077			6,312			6,758			7,774			6,663
Total past due 90 days and still accruing interest	$	26,670		$	21,317		$	24,529		$	24,383		$	24,806

The effect on interest income in 2000 of loans on non-accrual status at year end is presented below:

(In thousands)
Gross amount of interest that would have been
recorded at original rate	$2,489
Interest that was reflected in income	684
Interest income not recognized	$1,805

Total non-accrual loans at year end 2000 increased $6.6 million over 1999 levels, mainly due to an increase of $4.2 million in non-accrual business real estate loans and an increase of $3.2 million in non-accrual business loans. Non-accrual construction loans declined $707 thousand. Real estate which was acquired in foreclosure increased $360 thousand over year end 1999. Total non-performing assets remain very low compared to the Company’s peers, with the non-performing assets to total loans ratio at .27%. This ratio, which was .20% at September 30, 2000, ranked third best among the top 50 banks in the country, as ranked by a leading investment banking firm. Loans past due 90 days and still accruing interest increased $5.4 million at year end 2000 compared to 1999 mainly due to increases in delinquency for credit card loans, personal banking loans, and personal real estate loans.

The Company engages in various venture capital activities through direct venture investments and a venture capital subsidiary. At December 31, 2000, these debt and equity investments had a carrying value of $14.0 million and funded 14 companies or partnerships. Many of these investments are not readily marketable. In addition, the Company’s venture capital subsidiary is qualified as a Missouri Certified Capital Company. This certification expands its investment opportunities to Missouri businesses with less than $4 million in revenues. Investments held under this certification were $5.5 million at year end 2000.

The Company organized a $30 million limited partnership venture fund in 1993 with 49% outside participation, which is managed by a subsidiary. The partnership has a 10 year life, and the Company has satisfied its total commitment of $15.5 million. At December 31, 2000, the Company’s investment in this partnership was $9.7 million. Management believes the potential for long-term gains in these types of investment activity outweighs the potential risk of losses.

At December 31, 2000, the Company’s mortgage banking subsidiary held residential real estate loans of approximately $12.4 million at lower of cost or market, which are to be resold to secondary markets within approximately three months.

There were no loan concentrations of multiple borrowers in similar activities at December 31, 2000, which exceeded 10% of total loans. The Company’s aggregate legal lending limit to any single or related borrowing entities is in excess of $125 million. The largest exposures generally do not exceed $70 million.

INVESTMENT SECURITIES ANALYSISDuring 2000, total investment securities decreased $595.1 million to $1.92 billion (excluding unrealized gains/losses) compared to $2.51 billion at the previous year end. The decrease was mainly due to normal maturities, the proceeds of which funded an increase in loans. The average tax equivalent yield on total investment securities was 6.27% in 2000 and 6.14% in 1999.

At December 31, 2000, available for sale securities totaled $1.86 billion, which included a net unrealized gain in fair value of $25.7 million. The amount of the related after tax unrealized gain reported in stockholders’ equity was $16.0 million. Most of the unrealized gain in fair value related to marketable equity securities held by the Parent. This gain was partly offset by unrealized losses in CMO and asset-backed securities held by bank subsidiaries. The market value of the available for sale portfolio will vary as interest rates change; however, management expects normal maturities from the securities portfolio to meet most of the Company’s liquidity needs. Non-marketable equity securities, which are carried at cost (less allowances for other than temporary declines in value) are generally held by the Parent and non-bank subsidiaries due to regulatory restrictions, except for Federal Reserve Bank stock held by bank subsidiaries.

Investment securities at year end for the past two years are shown below:

		December 31
(In thousands)		2000		1999
Amortized Cost
U.S. government and
federal agency obligations	$	745,645	$	1,144,694
State and municipal obligations		62,280		79,362
CMO’s and asset-backed securities		921,741		1,129,341
Other debt securities		99,963		82,634
Equity securities		64,855		50,560
Trading securities		20,674		23,639
Total	$	1,915,158	$	2,510,230
Fair Value
U.S. government and
federal agency obligations	$	749,620	$	1,136,332
State and municipal obligations		62,734		80,263
CMO’s and asset-backed securities		908,220		1,106,975
Other debt securities		99,731		82,262
Equity securities		99,924		78,944
Trading securities		20,674		23,639
Total	$	1,940,903	$	2,508,415

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS[CONT.]

A summary of maturities by category of investment securities and the weighted average yield for each range of maturities as of December 31, 2000, is presented in the Investment Securities note to the consolidated financial statements. U.S. government and federal agency securities comprise 39% of the investment portfolio at December 31, 2000, with a weighted average yield of 6.30% and an estimated average maturity of 1.6 years; CMO’s and asset-backed securities comprise 47% with a weighted average yield of 6.30% and an estimated average maturity of 3.8 years.

Other debt and equity securities above include Federal Reserve Bank stock and other bonds, notes, corporate stock (held primarily by non-banking entities) and debentures. The tax equivalent yield on these securities in 2000 computed on average balances invested was 6.29%.

DEPOSITS AND BORROWINGSDeposits are the primary funding source for the Company’s banks, and are acquired from a broad base of local markets, including both individual and corporate customers. Total deposits were $9.08 billion at year end 2000 compared to $9.16 billion at year end 1999, reflecting a decline of $82.4 million, or .9%. On a yearly average basis, deposits decreased $318.1 million, or 3.4%, during 2000 compared to 1999. Bank funding sources have been in greater demand during 2000, due to strong growth in lending. This has caused some banks to incur higher incremental borrowings to fund asset growth. The Company has resisted aggressively raising deposit rates in order to attract higher costing deposits or acquiring significant expensive wholesale funding, which would reduce the net interest margin. The Company’s strong liquidity position, including its lower loans to deposits ratio relative to other banks, has enabled it to keep funding costs lower without deposit growth, and still profitably fund its loan growth.

The following table shows year end deposits by type as a percentage of total deposits.

	December 31
	2000		1999
Non-interest bearing demand	17.2	%	17.3	%
Savings and interest bearing demand	55.6		56.2
Time open and C.D.’s of less than $100,000	22.9		23.1
Time open and C.D.’s of $100,000 and over	4.3		3.4
Total deposits	100.0	%	100.0	%

Core deposits (defined as all non-interest and interest bearing deposits, excluding short-term C.D.’s of $100,000 and over) supported 87% of average earning assets in 2000 and 90% in 1999. Average balances by major deposit category for thelast six years appear on pages 38 and 39. Maturity schedules of time deposits outstanding at December 31, 2000, appear on page 35 and in the Fair Value of Financial Instruments note to the consolidated financial statements.

Short-term borrowings consist mainly of federal funds purchased and securities sold under agreements to repurchase. Balances outstanding at year end 2000 were $543.9 million, a $498.6 million decrease from $1.04 billion outstanding at year end 1999. Balances in these accounts can fluctuate significantly on a day-to-day basis. The average balance of federal funds purchased and repurchase agreements increased $156.6 million in 2000 over 1999, and increased $87.3 million in 1999 over 1998. The average rate paid on these borrowings during 2000 was 5.78%. During 2000, additional funding of $200.0 million was obtained from the Federal Home Loan Bank (FHLB), of which $100.0 million is due in 2001 and $100.0 million is due in 2002. The weighted average year end rate paid on all outstanding FHLB advances at December 31, 2000, which amounted to $210.3 million, was 6.91%. Additional long-term debt includes $12.0 million borrowed from insurance companies to fund a venture capital initiative.

LIQUIDITY AND CAPITAL RESOURCES

The liquid assets of the Parent consist primarily of available for sale securities, which include readily marketable equity securities and commercial paper, and securities purchased under agreements to resell. Total investment securities and repurchase agreements were $101.3 million at cost and $132.6 million at fair value at December 31, 2000 compared to $88.2 million at cost and $113.3 million at fair value at December 31, 1999. Total liabilities of the Parent at December 31, 2000 increased to $17.2 million from $14.2 million at December 31, 1999. These liabilities consisted mainly of accrued income taxes, salaries, and employee benefits. The Parent had no third-party short-term borrowings or long-term debt during 2000. Primary sources of funds for the Parent are dividends and management fees from its subsidiary banks, which were $154.5 million and $28.2 million, respectively, in 2000. The subsidiary banks may distribute dividends without prior regulatory approval that do not exceed the sum of net income for the current year and retained net income for the preceding two years, subject to maintenance of minimum capital requirements. The Parent’s commercial paper, which management believes is readily marketable, has a P1 rating from Moody’s and an A1 rating from Standard & Poor’s. No commercial paper was outstanding

during the past three years. The Company has an A+ long term rating and an F1+ short term rating from Fitch, Inc. This credit availability, along with available secured short-term borrowings from an affiliate bank, should provide adequate funds to meet any outstanding or future commitments of the Parent. Management is not aware of any factors that would cause these ratings to be adversely impacted.

The liquid assets held by bank subsidiaries include available for sale securities, which consist mainly of investments in U.S. government, federal agency, and mortgage-backed securities. The available for sale bank portfolio totaled $1.72 billion at December 31, 2000, including an unrealized net loss of $9.5 million. Investment securities maturing in 2001 and 2002 total approximately $601 million and $184 million, respectively.

The Company continues to maintain a sound equity to assets ratio of 9.99%, based on 2000 average balances. At December 31, 2000, the Company and each of its banking subsidiaries exceeded the minimum risk based capital requirements established by banking regulatory agencies. These requirements specify ratios which represent capital as a percentage of assets and off-balance-sheet items which have been assigned to broad risk categories, each with a specified risk-weighting factor. A leverage ratio compares Tier 1 capital to adjusted average assets. At December 31, 2000, the consolidated Tier 1 and Total capital ratios were 12.04% and 13.36%, respectively, and the leverage ratio was 9.91%. The minimum ratios for well-capitalized banks are 6.00% for Tier 1 capital, 10.00% for Total capital and 5.00% for the leverage ratio.

The cash flows from the operating, investing and financing activities of the Company resulted in a net decrease in cash and due from banks of $68.4 million in 2000. Financing activities required cash of $406.7 million, resulting from a $498.6 million decline in short-term borrowings and treasury stock purchases of $98.7 million, partly offset by $200.0 million additional FHLB advances. Investing activities provided cash of $101.8 million, due mainly to a $567.5 million net decrease in investment securities, partly offset by a $394.9 million net increase in loans. In addition, operating activities, which typically generate significant liquidity, provided $236.4 million in cash, mainly due to net income. Future short-term liquidity needs for daily operations are not expected to vary significantly and the Company maintains adequate liquidity to meet that cash flow. The Company’s sound equity base, along with its low debt level, common and preferredstock availability, and excellent debt ratings, provide several alternatives for future financing. Future acquisitions may utilize partial funding through one or more of these options.

Cash and stock requirements for acquisitions, funding of various employee benefit programs and dividends were as follows:

(In millions)	2000				1999			1998
Use of cash
Cash used in acquisitions	$	–		$	–		$	.9
Purchases of treasury stock		98.7			81.6			85.1
Exercise of stock options, sales to
affiliate non-employee directors
and restricted stock awards, net		(3.4	)		(3.5	)		(3.7	)
Cash dividends		37.6			36.1			33.7
Use of stock
Acquisition-related issuance of
treasury stock		–			–			66.9
Acquisition-related issuance of new stock		–			–			17.1

In February 2000, the Board of Directors authorized the Company to purchase additional shares of common stock under its stock repurchase program, which brought the total purchase authorization to 3,000,000 shares. The Company has routinely used these reacquired shares to fund the Company’s annual 5% stock dividends and other employee benefit programs. At December 31, 2000, the Company had acquired approximately 2,683,000 shares under the February 2000 authorization. Share purchases during 2000 were made at an average price of $32.95.

Cash dividends paid by the Company increased 8.5% during 2000 compared to 1999. This is the 32nd consecutive year the Company has increased cash dividends per share. Total return to shareholders, including cash and stock dividends, and the improvement in stock price, was 34.1% for the year.

Various commitments and contingent liabilities arise in the normal course of business which are not required to be recorded on the balance sheet. The most significant of these are loan commitments totaling $2.87 billion (excluding approximately $2.43 billion in unused approved lines of credit related to credit card loan agreements) and standby letters of credit, net of participations to non-affiliated companies, totaling $302.2 million at December 31, 2000. The Company has various other financial instruments with off-balance-sheet risk, such as commercial letters of credit, foreign exchange contracts to purchase and sell foreign currency, and interest rate swap agreements. Management does not anticipate any material losses arising from commitments and contingent liabilities and believes there are no material commitments to extend credit that represent risks of an unusual nature.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS[CONT.]

INTEREST RATE SENSITIVITY

The Asset/Liability Management Committee measures and manages the Company’s interest rate risk sensitivity on a monthly basis to maintain stability in earnings throughout various rate environments. The Committee evaluates the Company’s risk position to determine whether the level of exposure is significant enough to hedge a potential decline in earnings or whether the Company can safely increase risk to enhance returns. Three main analytical tools provide management insight into the Company’s exposure to changing rates: repricing or GAP reports, net interest income simulations, and market value analyses. These measurement tools indicate that the Company is currently well within acceptable risk guidelines as set by management and that interest rate risk is low.

The repricing schedule which follows illustrates the repricing mismatch within the Company’s interest sensitive assets and liabilities. This schedule provides management with a snapshot of the maturity or repricing timing of asset and liability principal cash flows. The interest sensitivity gap portrays the timing of net repricing risk within the Company’s balance sheet. A negative sensitivity gap would indicate that more liabilities will be repricing within that particular time frame such that, if rates rise, liabilities will be repricing up faster than assets. A positive gap would indicate the opposite. GAP reports can be somewhat misleading in that they typically capture only the repricing timing within the balance sheet, while they are less accurate in capturing other significant risks such as basis risk and embedded options risk. Basis risk involves the potential for the spread relationship between rates to change under different rate environments, while embedded options risk addresses the potential for the alteration of the level and/or timing of cash flows given changes in rates. Quantifying these additional risks within a repricing context would make the gap position in the first year more positive, as the recognition of mortgage prepayments would shorten the duration of assets and partial repricing of some deposits would lengthen the duration of liabilities.

The Company’s main interest rate measurement tool is income simulation, which projects net interest income under various rate scenarios in order to quantify the magnitude and timing of potential rate-related changes in accounting income. Management has set policy guidelines specifying acceptable limits within which net interest income can change under various rate change scenarios. These rate movements, against which compliance is measured, includea “most likely” rate forecast provided by an outside vendor, as well as six “shock” scenarios which are intended to capture interest rate risk under extremely adverse conditions by immediately shifting rates up and down. Simulation results indicate that the Company is well within all limits. The Company also measures interest rate risk by simulating changes in net interest income under gradually rising and declining parallel shift scenarios, as well as scenarios which allow for twists in the shape of the yield curve. Income simulations are more informative than GAP reports because they are able to capture more of the dynamics within the balance sheet such as basis risk and embedded options risk. The composition of products on the balance sheet is assumed to remain constant so that the analyses capture risks to the current balance sheet mix only. As of December 31, 2000, 100 and 200 basis point gradual shifts in the Treasury yield curve would be expected to have the following impact on twelve month net interest income:

	Increase			% of Net
(Dollars in millions)	(Decrease)			Interest Income
200 basis points rising	$	8.0		1.7	%
100 basis points rising		5.6		1.2
100 basis points falling		(5.8	)	(1.2	)
200 basis points falling		(11.0	)	(2.3	)

Simulation results also illustrate that the Company’s net interest income over the next twelve months is more susceptible to large declines rather than increases in market rates. This is mainly a function of the limited downside repricing potential of some deposit rates. Longer horizon simulations indicate a barbell structure to the repricing nature of the balance sheet; asset-sensitive in the short- and long-terms while more liabilities reprice than assets in the intermediate term.

While simulations capture rate-related risks to the timing of net interest income, they do not capture risks within the current balance sheet beyond the simulated horizon. The Company uses market value analyses to help identify longer-term risks that may reside on the current balance sheet. This is considered a secondary risk measurement tool by management. The market value of equity is indicative of the present value of all future income streams generated by the current balance sheet. The Company measures the market value of equity as the net present value of all asset and liability cash flows discounted at forward rates suggested by the current Treasury curve plus appropriate credit and rate risk spreads. It is the change in the market value of equity under different rate environments which gives insight into the magnitude of risk to future earnings due to

rate changes. Management has set policy limits concerning potential declines in the market value of equity within which it feels comfortable that risk is relatively low. Current results show that the Company is well within these limits. Market value analyses are also particularly important in that they help management understand the price sensitivity characteristics of non-marketable bank products under different rate environments.

Throughout the year, the Company’s net interest income grew mainly as a result of strong loan growth as well as management’s ability to hold down key deposit rates asmarket rates increased. During the year, the Company’s interest rate risk profile changed to indicate more exposure to declining rates. The Committee has identified the main sources of exposure and believes that overall interest rate risk is low. The Company’s balance sheet is well-diversified, exposure to volatile purchased funding remains low, credit quality is excellent, the use of off-balance-sheet derivative products is insignificant, embedded options risk is low, and the Company’s strong deposit base still acts as a natural hedge in periods of significant rate volatility. Management believes that the Company is appropriately positioned to protect and enhance earnings throughout various rate environments.

The following is an analysis of sensitivity gaps of interest earning assets and interest bearing liabilities:

REPRICING AND INTEREST RATE SENSITIVITY ANALYSIS
December 31, 2000

		1-3		4-6			7-12			1-5		Over 5
(Dollars in thousands)		Months		Months			Months			Years		Years		Total
Interest earning assets:
Loans, net of unearned income	$	3,336,865	$	284,299		$	1,051,018		$	2,859,814	$	374,669	$	7,906,665
Investment securities		253,295		148,585			238,750			1,011,018		289,255		1,940,903
Federal funds sold and securities
purchased under agreements to resell		241,835		–			–			–		–		241,835
Total interest earning assets		3,831,995		432,884			1,289,768			3,870,832		663,924		10,089,403
Interest bearing liabilities:
Time open & C.D.’s of less than $100,000		526,149		460,823			432,021			658,460		3,604		2,081,057
Time open & C.D.’s of $100,000 & over		89,065		89,385			116,692			90,462		441		386,045
Savings and interest bearing demand (A)		2,319,586		1,215,385			246,408			890,155		378,195		5,049,729
Federal funds purchased and securities
sold under agreements to repurchase		543,874		–			–			–		–		543,874
Long-term debt and other borrowings		105,790		50,197			404			52,798		15,495		224,684
Total interest bearing liabilities		3,584,464		1,815,790			795,525			1,691,875		397,735		8,285,389
Interest sensitivity gap	$	247,531	$	(1,382,906	)	$	494,243		$	2,178,957	$	266,189	$	1,804,014
Cumulative interest sensitivity gap	$	247,531	$	(1,135,375	)	$	(641,132	)	$	1,537,825	$	1,804,014
Cumulative ratio of interest-sensitive assets
to interest-sensitive liabilities		1.07		.79			.90			1.19		1.22

(A) The Company recognizes the fact that, although savings and other interest bearing demand deposits can potentially reprice or be withdrawn at any time, slotting the entirety of these balances in the 1 to 3 month time frame dramatically overstates their sensitivity. Historical trends and analyses have shown that the majority of these deposits neither reprice fully with market rates nor will customers significantly alter balances based on changes in market rates. These balances have been spread over longer time frames to reflect these findings.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS[CONT.]

OPERATING SEGMENTS

The Company segregates financial information for use in assessing its performance and allocating resources among three operating segments. The results are determined based on the Company’s management accounting process, which assigns balance sheet and income statement items to each responsible segment. These segments are defined by customer base and product type. The management process measures the performance of the operating segments based on the management structure of the Company and is not necessarily comparable with similar information for any other financial institution. Each segment is managed by executives who, in conjunction with the Chief Executive Officer, make strategic business decisions regarding that segment. The three reportable operating segments are Consumer, Commercial and Money Management. Additional information is presented in the Segments note to the consolidated financial statements.

In the recent rising interest rate environment, sources of funds (deposits) become more valuable, and uses of funds (loans and investments) become more expensive, thereby affecting the profitability of the related activities. The Company’s internal funds transfer pricing methodology uses a moving average market rate. It has increased at a faster pace than the actual increase in our average deposit rates, loan yields, and in particular, our average investment yields. The transfer pricing rate increase in 2000 had the effect of improving the profitability of funds providers (Consumer segment), reducing profitability of funds users (Commercial segment), and reducing the investment portfolio profitability (outside of the segments). The increased loan volume in the Commercial segment more than offset the negative effect of an increased cost of funds rate assigned to that segment.

CONSUMERThe Consumer segment includes the retail branch network, consumer finance, bankcard, student loans and discount brokerage services. Pre-tax income for 2000 was $139.9 million, an increase of $37.8 million, or 37.0%, over 1999. Most of the increase was due to $33.6 million higher funding credits allocated to the segment. Growth in credit card fees also contributed to the increase, along with lower salary expense. Income was reduced by a decline of $11.8 million in direct net interest income. Average loans directly related to the segment declined slightly in 2000 compared to 1999, and average deposits decreased 3.6%.

COMMERCIALThe Commercial segment provides corporate lending, leasing, international services, and corporate cashmanagement services. Pre-tax income increased $11.6 million, or 11.3%, over 1999. Direct net interest income increased $75.4 million, or 29.1%, over 1999. This increase was partly offset by a $59.7 million increase in assigned funding costs. Compared to 1999, total average loans increased 16.1%, mainly in business and business real estate loans. Average deposits decreased 4.3% from 1999 balances.

MONEY MANAGEMENTThe Money Management segment consists of the Trust and Capital Markets activities. The Trust group provides trust and estate planning services, and advisory and discretionary investment management services. The Capital Markets group sells primarily fixed income securities to individuals, corporations, correspondent banks, public institutions, and municipalities, and also provides investment safekeeping and bond accounting services. Pre-tax income was $23.0 million in 2000 compared to $25.9 million in 1999, a decrease of $2.9 million. Higher data processing expense accounted for most of the decrease. An improvement in direct net interest income was offset by a decrease in assigned funding credits.

IMPACT OF RECENTLY
ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and its amendments were adopted by the Company on January 1, 2001. SFAS No. 133 established accounting and reporting standards for derivative instruments and hedging activities. All derivatives must be recognized on the balance sheet at fair value, with the adjustment to fair value recorded in current earnings. For derivatives qualifying as hedges, changes in the fair value of the derivative will be either offset against the changes in fair value of the hedged item through current earnings, or recognized in other comprehensive income until the hedged item is recognized in current earnings based on the nature of the hedge. The ineffective portion of the derivative’s change in fair value will be immediately recognized in current earnings.

The Company uses some derivative products as part of its overall risk management process. The Company identified several areas in which derivative products exist and are affected by this new accounting standard. Forward contracts are used to manage risk positions associated with certain residential mortgage banking and foreign exchange activities. The Company also has a minimal number of interest rate swaps in place to manage interest rate risk on fixed rate

loans. The transition adjustment increased 2001 net income by approximately $9 thousand. Given the Company’s present risk management policies and derivative usage, future application of SFAS 133 is not expected to have a significant impact on the financial statements of the Company.

EFFECTS OF INFLATION

The impact of inflation on financial institutions differs significantly from that exerted on industrial entities. Financial institutions are not heavily involved in large capital expenditures used in the production, acquisition or sale of products. Virtually all assets and liabilities of financial institutions are monetary in nature and represent obligations to pay or receive fixed and determinable amounts not affected by future changes in prices. Changes in interest rates have a significant effect on the earnings of financial institutions. Higher interest rates generally follow the rising demand of borrowers and the corresponding increased funding requirements of financial institutions. Although interest rates are viewed as the price of borrowing funds, the behavior of interest rates differs significantly from the behavior of the prices of goods and services. Prices ofgoods and services may be directly related to that of other goods and services while the price of borrowing relates more closely to the inflation rate in the prices of those goods and services. As a result, when the rate of inflation slows, interest rates tend to decline while absolute prices for goods and services remain at higher levels. Interest rates are also subject to restrictions imposed through monetary policy, usury laws and other artificial constraints. The rate of inflation has been relatively low in recent years.

CAUTIONARY STATEMENT PURSUANT
TO SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995

This report contains “forward-looking statements” within the meaning of the federal securities laws. Such statements are subject to certain risks and uncertainties, including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS[CONT.]

AVERAGE BALANCE SHEETS - AVERAGE RATES AND YIELDS

									Years Ended December 31
					2000							1999							1998
						Average							Average							Average
					Interest	Rates						Interest	Rates						Interest	Rates
(Dollars in thousands)		Average			Income/	Earned/			Average		Income/		Earned/			Average			Income/	Earned/
		Balance			Expense	Paid			Balance		Expense		Paid			Balance			Expense	Paid
ASSETS
Loans: (A)
Business (B)	$	2,628,201		$	215,199	8.19	%	$	2,424,416		$	177,298	7.31	%	$	2,211,936		$	171,290	7.74	%
Construction and development		382,106			33,364	8.73			352,767			27,612	7.83			257,920			21,123	8.19
Real estate - business		1,267,872			104,757	8.26			1,075,335			85,661	7.97			955,057			79,850	8.36
Real estate - personal		1,417,548			105,229	7.42			1,337,578			97,051	7.26			1,256,118			94,399	7.52
Personal banking		1,608,795			136,165	8.46			1,525,662			123,076	8.07			1,402,676			119,894	8.55
Credit card		497,519			70,256	14.12			501,109			65,193	13.01			513,124			68,776	13.40
Total loans		7,802,041			664,970	8.52			7,216,867			575,891	7.98			6,596,831			555,332	8.42
Investment securities:
U.S. government & federal agency		913,285			56,486	6.18			1,263,601			75,865	6.00			1,418,501			87,349	6.16
State & municipal obligations (B)		72,209			5,641	7.81			91,390			7,273	7.96			98,664			7,909	8.02
CMO’s and asset-backed securities		1,034,172			64,336	6.22			1,162,167			71,805	6.18			880,617			55,555	6.31
Trading account securities		11,000			765	6.95			13,163			845	6.42			11,302			554	4.90
Other marketable securities (B)		86,133			5,895	6.84			116,431			6,993	6.01			142,125			8,325	5.86
Other non-marketable securities		52,957			2,853	5.39			33,616			1,736	5.16			31,795			1,845	5.80
Total investment securities		2,169,756			135,976	6.27			2,680,368			164,517	6.14			2,583,004			161,537	6.25
Federal funds sold and securities
purchased under agreements to resell		227,623			14,517	6.38			287,305			14,297	4.98			292,863			15,781	5.39
Total interest earning assets		10,199,420			815,463	8.00			10,184,540			754,705	7.41			9,472,698			732,650	7.73
Less allowance for loan losses		(125,887	)						(119,567	)						(110,904	)
Unrealized gain (loss)
on investment securities		(3,146	)						41,438							65,420
Cash and due from banks		533,028							590,367							608,981
Land, buildings and equipment-net		244,877							228,236							218,201
Other assets		170,838							179,450							215,227
Total assets	$	11,019,130						$	11,104,464						$	10,469,623
LIABILITIES AND EQUITY
Interest bearing deposits:
Savings	$	316,532			5,516	1.74		$	336,845			5,783	1.72		$	317,833			7,369	2.32
Interest bearing demand		4,896,337			144,398	2.95			5,073,867			126,014	2.48			4,377,794			134,773	3.08
Time open & C.D.’s of less than $100,000		2,068,653			112,182	5.42			2,182,804			109,857	5.03			2,197,549			118,581	5.40
Time open & C.D.’s of $100,000 and over		328,652			18,275	5.56			293,926			14,572	4.96			252,628			13,713	5.43
Total interest bearing deposits		7,610,174			280,371	3.68			7,887,442			256,226	3.25			7,145,804			274,436	3.84
Borrowings:
Federal funds purchased and securities
sold under agreements to repurchase		777,782			44,964	5.78			621,160			27,827	4.48			533,862			25,827	4.84
Long-term debt and other borrowings (C)		104,958			6,613	6.30			26,627			884	3.32			12,953			494	3.82
Total borrowings		882,740			51,577	5.84			647,787			28,711	4.43			546,815			26,321	4.81
Total interest bearing liabilities		8,492,914			331,948	3.91	%		8,535,229			284,937	3.34	%		7,692,619			300,757	3.91	%
Non-interest bearing demand deposits		1,331,220							1,372,100							1,622,429
Other liabilities		94,288							117,933							125,362
Stockholders’ equity		1,100,708							1,079,202							1,029,213
Total liabilities and equity	$	11,019,130						$	11,104,464						$	10,469,623
Net interest margin (T/E)				$	483,515						$	469,768						$	431,893
Net yield on interest earning assets						4.74	%						4.61	%						4.56	%
Percentage increase in net interest
margin (T/E) over the prior year					2.93		%					8.77		%					7.49		%

(A) Loans on non-accrual status are included in the computation of average balances. Included in interest income above are loan fees and late charges, net of amortization of deferred loan origination costs, which are immaterial. Credit card income from merchant discounts and net interchange fees are not included in loan income.

(B) Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate. Business loan interest income includes tax free loan income of $3,587,000 in 2000, $3,579,000 in 1999, $3,499,000 in 1998, $3,144,000 in 1997 and $3,934,000 in 1996, including tax equivalent adjustments of $1,118,000 in 2000, $1,153,000 in 1999, $1,122,000 in 1998, $1,045,000 in 1997 and $1,323,000 in 1996. State and municipal interest income includes tax equivalent adjustments of $1,753,000 in 2000, $2,375,000in 1999, $2,641,000 in 1998, $2,583,000 in 1997 and $2,956,000 in 1996. Interest income on other marketable securities includes tax equivalent adjustments of $424,000 in 2000, $551,000 in 1999, $416,000 in 1998, $459,000 in 1997 and $585,000 in 1996.

					Years Ended December 31
		1997					1996					1995
															Average
			Average					Average					Average		Balance
		Interest	Rates				Interest	Rates				Interest	Rates		Five Year
Average		Income/	Earned/		Average		Income/	Earned/		Average		Income/	Earned/		Compound
Balance		Expense	Paid		Balance		Expense	Paid		Balance		Expense	Paid		Growth Rate
$1,835,546		$146,304	7.97	%	$1,670,328		$131,652	7.88	%	$1,703,933		$141,872	8.33	%	9.05	%
247,530		21,458	8.67		168,220		14,670	8.72		130,346		12,227	9.38		24.00
824,356		70,539	8.56		719,377		61,845	8.60		693,539		61,958	8.93		12.82
1,068,668		84,255	7.88		990,069		77,568	7.83		954,956		74,571	7.81		8.22
1,308,293		112,572	8.60		1,262,166		109,065	8.64		1,258,729		110,202	8.76		5.03
530,799		71,521	13.47		511,424		67,493	13.20		420,049		58,368	13.90		3.44
5,815,192		506,649	8.71		5,321,584		462,293	8.69		5,161,552		459,198	8.90		8.61
1,599,452		99,895	6.25		1,763,146		108,451	6.15		1,705,562		105,216	6.17		(11.74	)
99,328		7,775	7.83		115,021		9,060	7.88		123,152		9,577	7.78		(10.13	)
789,039		50,030	6.34		653,301		40,913	6.26		719,747		44,928	6.24		7.52
8,358		444	5.32		6,500		345	5.30		3,975		240	6.03		22.58
111,140		6,624	5.96		51,320		3,529	6.88		66,368		4,110	6.19		5.35
43,529		1,899	4.36		36,820		2,542	6.90		26,407		685	2.59		14.93
2,650,846		166,667	6.29		2,626,108		164,840	6.28		2,645,211		164,756	6.23		(3.89	)
246,361		13,647	5.54		467,103		25,334	5.42		205,547		12,075	5.87		2.06
8,712,399		686,963	7.88		8,414,795		652,467	7.75		8,012,310		636,029	7.94		4.95
(102,145	)				(98,312	)				(95,884	)				5.60
25,903					21,675					(13,983	)				NM
635,444					623,523					607,656					(2.59	)
213,087					208,967					205,702					3.55
187,513					194,278					209,168					(3.97	)
$9,672,201					$9,364,926					$8,924,969					4.31	%
$  301,010		7,310	2.43		$  299,018		7,165	2.40		$  312,049		7,954	2.55		.29	%
3,776,101		126,719	3.36		3,656,476		121,367	3.32		3,329,272		112,729	3.39		8.02
2,160,892		116,798	5.41		2,195,628		119,366	5.44		2,206,655		118,267	5.36		(1.28	)
210,283		11,280	5.36		223,723		11,606	5.19		213,950		11,430	5.34		8.96
6,448,286		262,107	4.06		6,374,845		259,504	4.07		6,061,926		250,380	4.13		4.65
450,439		22,202	4.93		449,831		21,427	4.76		442,413		23,792	5.38		11.95
11,565		851	7.37		14,690		1,054	7.17		16,195		1,146	7.08		45.32
462,004		23,053	4.99		464,521		22,481	4.84		458,608		24,938	5.44		13.99
6,910,290		285,160	4.13	%	6,839,366		281,985	4.12	%	6,520,534		275,318	4.22	%	5.43
1,750,171					1,559,157					1,497,474					(2.33	)
69,539					74,374					60,527					9.27
942,201					892,029					846,434					5.39
$9,672,201					$9,364,926					$8,924,969					4.31	%
		$401,803					$370,482					$360,711
			4.61	%				4.40	%				4.50	%
		8.45		%			2.71		%			13.58		%

(C) Interest expense of $433,000, $312,000, $31,000, $58,000 and $125,000 which was capitalized on construction projects in 2000, 1999, 1998, 1997 and 1996, respectively, is not deducted from the interest expense shown above.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS[CONT.]

QUARTERLY AVERAGE BALANCE SHEETS – AVERAGE RATES AND YIELDS

							Year Ended December 31, 2000
		Fourth Quarter					Third Quarter					Second Quarter					First Quarter
				Average					Average					Average					Average
				Rates					Rates					Rates					Rates
(Dollars in millions)	Average			Earned/		Average			Earned/		Average			Earned/		Average			Earned/
	Balance			Paid		Balance			Paid		Balance			Paid		Balance			Paid
ASSETS
Loans:
Business (A)		$ 2,661		8.36	%		$ 2,623		8.36	%		$ 2,655		8.22	%		$ 2,574		7.80	%
Construction and development		378		8.84			397		9.09			386		8.67			367		8.29
Real estate – business		1,275		8.35			1,258		8.43			1,272		8.22			1,267		8.04
Real estate – personal		1,415		7.52			1,433		7.43			1,428		7.46			1,393		7.28
Personal banking		1,661		8.70			1,619		8.57			1,589		8.38			1,566		8.19
Credit card		501		14.47			498		14.54			490		13.76			501		13.70
Total loans		7,891		8.69			7,828		8.67			7,820		8.48			7,668		8.24
Investment securities:
U.S. government & federal agency		772		6.29			841		6.15			939		6.19			1,104		6.14
State & municipal obligations (A)		66		7.78			72		7.61			74		7.91			77		7.94
CMO’s and asset-backed securities		947		6.24			1,013		6.18			1,068		6.24			1,109		6.22
Trading account securities		11		7.80			12		6.89			9		6.30			12		6.30
Other marketable securities (A)		88		7.24			84		6.94			83		6.45			89		6.73
Other non-marketable securities		60		5.47			65		5.60			53		5.36			33		4.87
Total investment securities		1,944		6.34			2,087		6.23			2,226		6.27			2,424		6.24
Federal funds sold and securities
purchased under agreements to resell		215		6.54			249		6.70			229		6.46			218		5.75
Total interest earning assets		10,050		8.19			10,164		8.12			10,275		7.96			10,310		7.71
Less allowance for loan losses		(128	)				(127	)				(125	)				(123	)
Unrealized gain (loss) on
investment securities		14					(7	)				(9	)				(10	)
Cash and due from banks		521					523					533					556
Land, buildings and equipment – net		254					246					241					238
Other assets		167					165					180					171
Total assets		$10,878					$10,964					$11,095					$11,142
LIABILITIES AND EQUITY
Interest bearing deposits:
Savings		$     302		1.75			$     314		1.75			$     328		1.74			$     322		1.73
Interest bearing demand		4,810		3.10			4,841		3.05			4,972		2.89			4,965		2.76
Time open & C.D.’s under $100,000		2,063		5.80			2,050		5.58			2,066		5.22			2,096		5.10
Time open & C.D.’s $100,000 & over		349		5.95			334		5.47			323		5.73			308		5.04
Total interest bearing deposits		7,524		3.92			7,539		3.79			7,689		3.58			7,691		3.45
Borrowings:
Federal funds purchased and securities
sold under agreements to repurchase		634		5.88			796		6.12			804		5.84			879		5.35
Long-term debt and other borrowings		183		6.60			125		6.61			84		6.09			26		3.26
Total borrowings		817		6.04			921		6.18			888		5.86			905		5.29
Total interest bearing liabilities		8,341		4.13	%		8,460		4.05	%		8,577		3.82	%		8,596		3.64	%
Non-interest bearing demand deposits		1,302					1,311					1,336					1,377
Other liabilities		109					91					90					87
Stockholders’ equity		1,126					1,102					1,092					1,082
Total liabilities and equity		$10,878					$10,964					$11,095					$11,142
Net interest margin (T/E)		$     120					$     122					$     122					$     120
Net yield on interest earning assets				4.76	%				4.75	%				4.77	%				4.68	%

(A) Includes tax equivalent calculations.

							Year Ended December 31, 1999
		Fourth Quarter					Third Quarter					Second Quarter					First Quarter
				Average					Average					Average					Average
				Rates					Rates					Rates					Rates
(Dollars in millions)	Average			Earned/		Average			Earned/		Average			Earned/		Average			Earned/
	Balance			Paid		Balance			Paid		Balance			Paid		Balance			Paid
ASSETS
Loans:
Business (A)	$	2,523		7.44	%	$	2,456		7.39	%	$	2,352		7.24	%	$	2,366		7.17	%
Construction and development		355		8.02			352		7.87			354		7.67			350		7.75
Real estate – business		1,165		7.95			1,087		7.94			1,047		8.02			1,000		7.96
Real estate – personal		1,357		7.20			1,334		7.13			1,329		7.31			1,330		7.39
Personal banking		1,589		8.10			1,598		7.91			1,470		8.06			1,444		8.22
Credit card		502		13.00			500		13.20			493		12.78			509		13.05
Total loans		7,491		8.01			7,327		7.96			7,045		7.95			6,999		8.00
Investment securities:
U.S. government & federal agency		1,164		6.05			1,232		5.92			1,290		5.98			1,371		6.07
State & municipal obligations (A)		86		8.00			92		7.82			93		7.91			94		8.11
CMO’s and asset-backed securities		1,159		6.15			1,224		6.16			1,251		6.15			1,012		6.27
Trading account securities		12		9.16			11		6.09			12		4.54			18		6.00
Other marketable securities (A)		91		7.05			90		5.96			88		5.81			198		5.63
Other non-marketable securities		35		5.27			34		5.01			33		5.07			33		5.31
Total investment securities		2,547		6.20			2,683		6.08			2,767		6.10			2,726		6.17
Federal funds sold and securities
purchased under agreements to resell		188		5.26			170		5.32			286		4.88			510		4.81
Total interest earning assets		10,226		7.51			10,180		7.42			10,098		7.36			10,235		7.35
Less allowance for loan losses		(122	)				(120	)				(119	)				(117	)
Unrealized gain on investment securities		13					26					53					74
Cash and due from banks		599					573					610					579
Land, buildings and equipment – net		234					231					226					222
Other assets		188					172					168					190
Total assets	$	11,138				$	11,062				$	11,036				$	11,183
LIABILITIES AND EQUITY
Interest bearing deposits:
Savings	$	326		1.63		$	340		1.57		$	347		1.69		$	335		1.99
Interest bearing demand		5,057		2.55			5,096		2.46			5,092		2.41			5,051		2.52
Time open & C.D.’s under $100,000		2,128		4.96			2,144		4.93			2,207		5.03			2,253		5.21
Time open & C.D.’s $100,000 & over		296		4.89			285		4.82			293		5.02			301		5.09
Total interest bearing deposits		7,807		3.25			7,865		3.18			7,939		3.20			7,940		3.36
Borrowings:
Federal funds purchased and securities
sold under agreements to repurchase		723		4.83			627		4.55			526		4.21			607		4.22
Long-term debt and other borrowings		27		3.35			27		3.25			27		3.25			27		3.42
Total borrowings		750		4.78			654		4.50			553		4.16			634		4.18
Total interest bearing liabilities		8,557		3.39	%		8,519		3.28	%		8,492		3.26	%		8,574		3.42	%
Non-interest bearing demand deposits		1,397					1,356					1,348					1,387
Other liabilities		102					111					117					142
Stockholders’ equity		1,082					1,076					1,079					1,080
Total liabilities and equity	$	11,138				$	11,062				$	11,036				$	11,183
Net interest margin (T/E)	$	121				$	120				$	116				$	113
Net yield on interest earning assets				4.68	%				4.67	%				4.61	%				4.49	%

(A) Includes tax equivalent calculations.

CONSOLIDATED BALANCE SHEETS
Commerce Bancshares, Inc. and Subsidiaries

	December 31
	2000			1999
	(In thousands)
ASSETS
Loans, net of unearned income	$	7,906,665		$	7,576,892
Allowance for loan losses		(128,445	)		(123,042	)
Net loans		7,778,220			7,453,850
Investment securities:
Available for sale		1,864,991			2,451,785
Trading account		20,674			23,639
Other non-marketable		55,238			32,991
Total investment securities		1,940,903			2,508,415
Federal funds sold and securities
purchased under agreements to resell		241,835			238,602
Cash and due from banks		616,724			685,157
Land, buildings and equipment – net		257,629			235,163
Goodwill and core deposit premium – net		58,182			68,209
Other assets		221,624			211,540
Total assets	$	11,115,117		$	11,400,936
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing demand	$	1,564,907		$	1,584,333
Savings and interest bearing demand		5,049,729			5,154,506
Time open and C.D.’s of less than $100,000		2,081,057			2,114,443
Time open and C.D.’s of $100,000 and over		386,045			310,841
Total deposits		9,081,738			9,164,123
Federal funds purchased and securities
sold under agreements to repurchase		543,874			1,042,429
Long-term debt and other borrowings		224,684			25,735
Other liabilities		121,066			88,817
Total liabilities		9,971,362			10,321,104
Stockholders’ equity:
Preferred stock, $1 par value
Authorized and unissued 2,000,000 shares		–			–
Common stock, $5 par value
Authorized 100,000,000 shares; issued 62,655,891
shares in 2000 and 62,428,078 shares in 1999		313,279			312,140
Capital surplus		147,436			129,173
Retained earnings		671,147			642,746
Treasury stock of 78,513 shares in 2000
and 53,829 shares in 1999, at cost		(2,895	)		(2,089	)
Other		(1,179	)		(916	)
Accumulated other comprehensive income (loss)		15,967			(1,222	)
Total stockholders’ equity		1,143,755			1,079,832
Total liabilities and stockholders’ equity	$	11,115,117		$	11,400,936

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF INCOME
Commerce Bancshares, Inc. and Subsidiaries

	For the Years Ended December 31
(In thousands, except per share data)		2000		1999		1998
INTEREST INCOME
Interest and fees on loans	$	663,852	$	574,738	$	554,210
Interest on investment securities		133,799		161,591		158,480
Interest on federal funds sold and securities
purchased under agreements to resell		14,517		14,297		15,781
Total interest income		812,168		750,626		728,471
INTEREST EXPENSE
Interest on deposits:
Savings and interest bearing demand		149,914		131,797		142,142
Time open and C.D.’s of less than $100,000		112,182		109,857		118,581
Time open and C.D.’s of $100,000 and over		18,275		14,572		13,713
Interest on federal funds purchased and securities
sold under agreements to repurchase		44,964		27,827		25,827
Interest on long-term debt and other borrowings		6,180		572		463
Total interest expense		331,515		284,625		300,726
Net interest income		480,653		466,001		427,745
Provision for loan losses		35,159		35,335		36,874
Net interest income after provision for loan losses		445,494		430,666		390,871
NON-INTEREST INCOME
Trust fees		58,588		55,773		50,460
Deposit account charges and other fees		71,025		68,538		63,145
Credit card transaction fees		51,453		44,466		36,786
Trading account profits and commissions		8,594		10,310		8,733
Net gains on securities transactions		541		892		6,894
Other		62,607		56,230		48,019
Total non-interest income		252,808		236,209		214,037
NON-INTEREST EXPENSE
Salaries and employee benefits		220,656		215,217		198,090
Net occupancy		30,381		27,950		23,805
Equipment		20,673		20,612		18,148
Supplies and communication		34,048		33,800		29,867
Data processing		39,620		36,966		32,148
Marketing		13,274		12,915		12,206
Goodwill and core deposit		8,016		8,528		9,193
Other		63,713		63,027		55,887
Total non-interest expense		430,381		419,015		379,344
Income before income taxes		267,921		247,860		225,564
Less income taxes		89,347		81,647		75,473
Net income	$	178,574	$	166,213	$	150,091
Net income per share – basic	$	2.79	$	2.50	$	2.23
Net income per share – diluted	$	2.76	$	2.47	$	2.19
Cash dividends per common share	$	.590	$	.544	$	.501

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Commerce Bancshares, Inc. and Subsidiaries

	For the Years Ended December 31
(In thousands)		2000			1999			1998
OPERATING ACTIVITIES
Net income	$	178,574		$	166,213		$	150,091
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses		35,159			35,335			36,874
Provision for depreciation and amortization		36,786			35,412			32,188
Accretion of investment security discounts		(2,279	)		(3,064	)		(3,978	)
Amortization of investment security premiums		4,210			10,878			7,833
Provision (benefit) for deferred income taxes		(2,583	)		(7,983	)		10,266
Net gains on securities transactions		(541	)		(892	)		(6,894	)
Net (increase) decrease in trading account securities		4,386			(10,057	)		(6,345	)
(Increase) decrease in interest receivable		(4,339	)		3,978			2,091
Increase (decrease) in interest payable		11,444			(5,124	)		1,917
Other changes, net		(24,389	)		(12,970	)		(7,111	)
Net cash provided by operating activities		236,428			211,726			216,932
INVESTING ACTIVITIES
Net cash received in acquisitions		–			–			15,113
Cash paid in sales of branches		(20,226	)		(25,179	)		–
Proceeds from sales of available for sale securities		201,851			117,268			360,446
Proceeds from maturities of available for sale securities		1,391,133			1,528,288			1,120,599
Purchases of available for sale securities		(1,025,442	)		(1,206,850	)	(1,680,147		)
Net (increase) decrease in federal funds sold and
securities purchased under agreements to resell		(3,233	)		22,933			(108,420	)
Net increase in loans		(394,928	)		(552,313	)		(607,290	)
Purchases of premises and equipment		(49,079	)		(43,923	)		(30,258	)
Sales of premises and equipment		1,773			6,014			8,543
Net cash provided (used) by investing activities		101,849			(153,762	)		(921,414	)
FINANCING ACTIVITIES
Net increase (decrease) in non-interest bearing demand,
savings and interest bearing demand deposits		(48,754	)		(277,804	)		440,001
Net increase (decrease) in time open and C.D.’s		74,374			(142,883	)		25,642
Net increase (decrease) in federal funds purchased and
securities sold under agreements to repurchase		(498,555	)		424,599			102,766
Repayment of long-term debt		(840	)		(1,175	)		(3,602	)
Additional borrowings		200,000			–			15,245
Purchases of treasury stock		(98,720	)		(81,648	)		(85,132	)
Issuance under stock purchase, option and benefit plans		3,398			3,486			3,737
Cash dividends paid on common stock		(37,613	)		(36,054	)		(33,742	)
Net cash provided (used) by financing activities		(406,710	)		(111,479	)		464,915
Decrease in cash and cash equivalents		(68,433	)		(53,515	)		(239,567	)
Cash and cash equivalents at beginning of year		685,157			738,672			978,239
Cash and cash equivalents at end of year	$	616,724		$	685,157		$	738,672

See accompanying notes to consolidated financial statements.

STATEMENTS OF STOCKHOLDERS’EQUITY
Commerce Bancshares, Inc. and Subsidiaries

															Accumulated
															Other
		Common		Capital			Retained		Treasury						Comprehensive
(In thousands, except per share data)		Stock		Surplus			Earnings		Stock				Other		Income (Loss)				Total
Balance, December 31, 1997	$	291,429	$	48,704		$	626,387		$	(14,252	)	$	(601	)	$	29,117		$	980,784
Net income							150,091												150,091
Change in unrealized gain (loss) on
available for sale securities																23,352			23,352
Total comprehensive income																			173,443
Purchase of treasury stock										(85,132	)								(85,132	)
Cash dividends paid ($.501 per share)							(33,742	)											(33,742	)
Issuance under stock purchase,
option and award plans, net				(5,464	)					11,201			(303	)					5,434
Pooling acquisitions		1,800		(43,316	)		11,170			69,898						603			40,155
5% stock dividend, net		13,534		106,235			(129,650	)		9,724									(157	)
Balance, December 31, 1998		306,763		106,159			624,256			(8,561	)		(904	)		53,072			1,080,785
Net income							166,213												166,213
Change in unrealized gain (loss) on
available for sale securities																(54,294	)		(54,294	)
Total comprehensive income																			111,919
Purchase of treasury stock										(81,648	)								(81,648	)
Cash dividends paid ($.544 per share)							(36,054	)											(36,054	)
Issuance under stock purchase,
option and award plans, net				(5,944	)					10,883			(12	)					4,927
5% stock dividend, net		5,377		28,958			(111,669	)		77,237									(97	)
Balance, December 31, 1999		312,140		129,173			642,746			(2,089	)		(916	)		(1,222	)		1,079,832
Net income							178,574												178,574
Change in unrealized gain (loss) on
available for sale securities																17,189			17,189
Total comprehensive income																			195,763
Purchase of treasury stock										(98,720	)								(98,720	)
Cash dividends paid ($.590 per share)							(37,613	)											(37,613	)
Issuance under stock purchase,
option and award plans, net				(2,535	)					7,439			(263	)					4,641
5% stock dividend, net		1,139		20,798			(112,560	)		90,475									(148	)
Balance, December 31, 2000	$	313,279	$	147,436		$	671,147		$	(2,895	)	$	(1,179	)	$	15,967		$	1,143,755

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Commerce Bancshares, Inc. and Subsidiaries

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATIONThe Company follows generally accepted accounting principles (GAAP) and reporting practices applicable to the banking industry. The preparation of financial statements under GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes. While the financial statements reflect management’s best estimates and judgment, actual results could differ from those estimates. The consolidated financial statements include the accounts of the Company and its substantially wholly-owned subsidiaries (after elimination of all material intercompany balances and transactions). Certain amounts for prior years have been reclassified to conform to the current year presentation.

ACQUISITIONS/INTANGIBLE ASSETSThe Company amortizes the cost in excess of the fair value of net assets acquired in purchase business combinations (goodwill) using the straight-line method over periods of 15-20 years. When facts and circumstances indicate potential impairment, the Company evaluates the recoverability of asset carrying values, including goodwill, using estimates of undiscounted future cash flows over remaining asset lives. Any impairment loss is measured by the excess of carrying values over fair values. Core deposit intangibles are amortized over a maximum of 10 years using accelerated methods. Results of operations of companies acquired in purchase business combinations are included from the date of acquisition.

CASH AND CASH EQUIVALENTSIn the accompanying consolidated statements of cash flows, cash and cash equivalents include only “Cash and due from banks” as segregated in the accompanying consolidated balance sheets.

LOANSInterest on loans is accrued based upon the principal amount outstanding. The accrual of interest on loans is discontinued when, in management’s judgment, the collectibility of interest or principal in the normal course of business is doubtful. Loan and commitment fees and costs are deferred and recognized in income over the life of the loan or commitment as an adjustment of yield.

ALLOWANCE/PROVISION FOR LOAN LOSSESThe provision for loan losses is based upon management’s estimate of the amount required to maintain an adequate allowance for losses, reflective of the risks in the loan portfolio. This estimate is based upon reviews of the portfolio, past loan loss experience, current economic conditions and such other factors, which in management’sjudgment, deserve current recognition. Impaired loans include all non-accrual loans and loans 90 days delinquent and still accruing interest.

INVESTMENTS IN DEBT AND EQUITY SECURITIES
Securities classified as available for sale are carried at fair value. Their related unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income, a component of stockholders’ equity. Premiums and discounts are amortized to interest income over the estimated lives of the securities. Gains and losses are calculated using the specific identification method. Trading account securities are carried at fair value with unrealized gains and losses recorded as non-interest income. Investments in equity securities without readily determinable fair values are stated at cost, less allowances for other than temporary declines in value.

PROPERTY AND EQUIPMENTLand is stated at cost, and buildings and equipment are stated at cost less accumulated depreciation. Depreciation is computed using straight-line and accelerated methods. Maintenance and repairs are charged to expense as incurred.

INCOME TAXESThe Company and its eligible subsidiaries file consolidated income tax returns. Deferred income taxes are provided on temporary differences between the financial reporting bases and income tax bases of the Company’s assets and liabilities.

DERIVATIVESThe Company is exposed to market risk, including changes in interest rates and currency exchange rates. To manage the volatility relating to these exposures, the Company’s risk management policies permit its use of derivative products. The Company manages potential credit exposure through established credit approvals, risk control limits and other monitoring procedures. The Company uses derivatives on a limited basis mainly to stabilize interest rate margins and hedge against interest rate movements, or to facilitate customers’ foreign exchange requirements. The Company more often manages normal asset and liability positions by altering the products it offers and by selling portions of specific loan or investment portfolios as necessary. Management believes the Company has and will be able to continue to position itself to manage these risks satisfactorily, without significant use of derivatives.

TREASURY STOCKPurchases of the Company’s common stock are recorded at cost. Upon reissuance, treasury stock is reduced based upon the average cost basis of shares held.

INCOME PER SHAREBasic income per share is computed using the weighted average number of common shares outstanding during each year. Diluted income per share includes the effect of all dilutive potential common shares (primarily stock options) outstanding during each year. All per share data has been restated to reflect the 5% stock dividend distributed in 2000.

ACQUISITIONS
The Company has signed a definitive agreement to acquire Centennial Bank, which has approximately $260 million in assets and three locations in the St. Louis area. Commerce will issue 876,750 shares in this transaction, which is expected to close in the first quarter of 2001. The acquisition will be accounted for as a pooling of interests transaction and is not expected to have a material impact on the financial statements of the Company.

In 1998, the Company acquired four Kansas banks. City National Bank of Pittsburg, Kansas, with assets of $120 million, was acquired in March for stock valued at $34.3 million. In November, the Company acquired Columbus State Bank, Columbus, Kansas, Fidelity State Bank in Garden City, and Heritage Bank of Olathe. These banks had combined assets of $310 million. Stock valued at $49.7 million was exchanged. The 1998 acquisitions were accounted for as poolings of interests.

Financial statements for periods prior to the consummation of acquisitions accounted for as poolings have not been restated because such restated amounts do not differ materially from the Company’s historical financial statements. The following schedule summarizes pro forma consolidated financial data as if the 1998 acquisitions had been consummated on January 1, 1998.

(In thousands, except per share data)	1998
Net interest income plus non-interest income	$655,024
Net income	153,403
Net income per share – diluted	2.20

LOANS AND ALLOWANCE FOR LOSSES
Major classifications of loans at December 31, 2000 and 1999 are as follows:

(In thousands)	2000	1999
Business	$2,659,511	$2,564,476
Real estate – construction	377,629	354,351
Real estate – business	1,305,397	1,247,956
Real estate – personal	1,397,770	1,377,903
Personal banking	1,641,473	1,510,380
Credit card	524,885	521,826
Total loans	$7,906,665	$7,576,892

Loans to directors and executive officers of the Parent and its significant subsidiaries and to their associates are summarized as follows:

(In thousands)
Balance at January 1, 2000	$33,074
Additions	42,494
Amounts collected	(20,361	)
Amounts written off	–
Balance at December 31, 2000	$55,207

Management believes all loans to directors and executive officers have been made in the ordinary course of business with normal credit terms, including interest rate and collateral considerations, and do not represent more than a normal risk of collection. There were no outstanding loans at December 31, 2000, to principal holders of the Company’s common stock.

The Company’s lending activity is generally centered in Missouri and its contiguous states. The Company maintains a diversified portfolio with limited industry concentrations of credit risk. Loans and loan commitments are extended under the Company’s normal credit standards, controls, and monitoring features. Most loan commitments are short term in nature, and loan maturities generally do not exceed five years. Collateral is commonly required and would include such assets as marketable securities and cash equivalent assets, accounts receivable and inventory, equipment, other forms of personal property, and real estate. At December 31, 2000, unfunded loan commitments totaled $2,872,555,000 (excluding $2,430,071,000 in unused approved lines of credit related to credit card loan agreements) which could be drawn by customers subject to certain review and terms of agreement. At December 31, 2000, loans of $221,813,000 were pledged at the Federal Reserve as collateral for discount window borrowings. There were no discount window borrowings at December 31, 2000.

A summary of the allowance for loan losses is as follows:

	Years Ended December 31
(In thousands)	2000	1999	1998
Balance, January 1	$123,042	$117,092	$105,918
Additions:
Provision for loan losses	35,159	35,335	36,874
Allowances of acquired banks	–	–	5,808
Total additions	35,159	35,335	42,682
Deductions:
Loan losses	41,326	40,538	42,366
Less recoveries	11,570	11,153	10,858
Net loan losses	29,756	29,385	31,508
Balance, December 31	$128,445	$123,042	$117,092

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS[CONT.]
Commerce Bancshares, Inc. and Subsidiaries

Impaired loans include all non-accrual loans and loans 90 days delinquent and still accruing interest. The net amount of interest income recorded on such loans during their impairment period was not significant. The Company had ceased recognition of interest income on loans with a book value of $19,617,000 and $12,979,000 at December 31, 2000 and 1999, respectively. The interest income not recognized on non-accrual loans was $1,805,000, $1,650,000 and $1,936,000 during 2000, 1999 and 1998, respectively. Loans 90 days delinquent and still accruing interest amounted to $26,670,000 and $21,317,000 at December 31, 2000 and 1999, respectively. Real estate and other assetsacquired in foreclosure amounted to $5,363,000 and $2,806,000 at December 31, 2000 and 1999, respectively.

INVESTMENT SECURITIES
A summary of the available for sale investment securities by maturity groupings as of December 31, 2000 follows below. The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security at December 31, 2000. Yields on tax exempt securities have not been adjusted for tax exempt status.

					Weighted
	Amortized			Fair	Average
(Dollars in thousands)	Cost			Value	Yield
U.S. government and federal agency obligations:
Within 1 year	$	417,806	$	418,470	6.40	%
After 1 but within 5 years		306,518		308,903	6.15
After 5 but within 10 years		17,445		18,092	6.58
After 10 years		3,876		4,155	5.79
Total U.S. government and federal agency obligations		745,645		749,620	6.30
State and municipal obligations:
Within 1 year		17,238		17,273	5.28
After 1 but within 5 years		29,200		29,718	5.22
After 5 but within 10 years		8,174		8,381	5.24
After 10 years		7,668		7,362	6.24
Total state and municipal obligations		62,280		62,734	5.37
CMO’s and asset-backed securities		921,741		908,220	6.30
Other debt securities:
Within 1 year		88,006		88,007
After 1 but within 5 years		11,857		11,624
After 5 but within 10 years		100		100
Total other debt securities		99,963		99,731
Equity securities		9,617		44,686
Total available for sale investment securities	$	1,839,246	$	1,864,991

The unrealized gains and losses by type are as follows:

			Gross		Gross
		Amortized	Unrealized		Unrealized			Fair
(In thousands)		Cost	Gains		Losses			Value
December 31, 2000
U.S. government and federal agency obligations	$	745,645	$	4,655	$	680	$	749,620
State and municipal obligations		62,280		874		420		62,734
CMO’s and asset-backed securities		921,741		1,824		15,345		908,220
Other debt securities		99,963		1		233		99,731
Equity securities		9,617		35,222		153		44,686
Total	$	1,839,246	$	42,576	$	16,831	$	1,864,991
December 31, 1999
U.S. government and federal agency obligations	$	1,144,694	$	1,308	$	9,670	$	1,136,332
State and municipal obligations		79,362		1,025		124		80,263
CMO’s and asset-backed securities		1,129,341		756		23,122		1,106,975
Other debt securities		82,634		–		372		82,262
Equity securities		17,569		30,247		1,863		45,953
Total	$	2,453,600	$	33,336	$	35,151	$	2,451,785

The following table presents proceeds from sales of securities and the components of net securities gains.

(In thousands)		2000		1999		1998
Proceeds from sales	$	201,851	$	117,268	$	360,446
Realized gains	$	4,314	$	2,113	$	7,588
Realized losses		3,773		1,221		694
Net realized gains	$	541	$	892	$	6,894

Investment securities with a par value of $637,865,000and $652,291,000 were pledged atDecember 31, 2000and 1999, respectively, to secure publicdeposits and forother purposes as required by law. Additional investmentsecurities with a par value of $26,629,000 were pledgedat the Federal Reserve as collateral for discount windowborrowings. Except for U.S. governmentand federalagency obligations, no investment in asingle issuerexceeds 10% of stockholders’ equity.

LAND, BUILDINGS AND EQUIPMENT
Land, buildings and equipment consist of the following at December 31, 2000 and 1999:

(In thousands)		2000		1999
Land	$	58,984	$	56,457
Buildings and improvements		302,848		283,644
Equipment		127,317		161,650
Total		489,149		501,751
Less accumulated depreciation
and amortization		231,520		266,588
Net land, buildings and equipment	$	257,629	$	235,163

Depreciation expense of $24,599,000, $23,847,000 and $21,018,000 for 2000, 1999 and 1998, respectively, was included in net occupancy expense, equipment expense and other expense in the consolidated income statements. Repairs and maintenance expense of $14,579,000, $15,150,000 and $14,841,000 for 2000, 1999 and 1998, respectively, was included in net occupancy expense, equipment expense and other expense. Interest expense capitalized on construction projects was $433,000, $312,000 and $31,000 in 2000, 1999 and 1998, respectively.

BORROWINGS
Short-term borrowings of the Company consisted mainly of federal funds purchased and securities sold under agreements to repurchase. The following table presents balance and interest rate information on these and other short-term borrowings.

								Maximum
		Year End		Average			Average	Outstanding
		Weighted		Weighted		Balance			at any	Balance at
(Dollars in thousands)	Borrower	Rate		Rate		Outstanding		Month End		December 31
Federal funds purchased	Subsidiary banks
and securities sold under
agreements to repurchase
2000		5.7	%	5.8	%	$	777,782	$	1,047,916	$	543,874
1999		4.1		4.5			621,160		1,042,429		1,042,429
1998		4.2		4.8			533,862		617,830		617,830
FHLB advances	Subsidiary bank
2000 (fixed rate)		7.1		7.1			32,377		50,000		50,000
(floating rate)		6.7		6.7			7,240		50,000		50,000

Debt of the Company which had an original term of over one year consisted of the following at December 31, 2000.

			Year End
		Maturity	Weighted			Year End
(Dollars in thousands)	Borrower	Date	Rate			Balance
FHLB advances	Subsidiary banks	2002	7.1	%	$		100,000
		2008-2013	5.5				10,298
Structured notes payable	Venture capital subsidiary	12/1/07	NM				4,478
		9/1/12	NM				7,515
Mortgage note payable	Bank realty subsidiary	Monthly until
		12/10/05	7.9				2,042
Other							351
Total long-term debt					$		124,684

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS[CONT.]
Commerce Bancshares, Inc. and Subsidiaries

Banking subsidiaries of the Company are members of the Federal Home Loan Bank (FHLB) and have access to term financing from the FHLB. These borrowings are secured by investment securities and residential mortgages under a blanket collateral agreement. Rates in effect on these borrowings at year end ranged from 5.0% to 7.4%. Approximately $55,500,000 of the long-term FHLB advances have a floating interest rate.

Other long-term debt includes funds borrowed from third-party insurance companies by a venture capital subsidiary, a Missouri Certified Capital Company, to support its investment activities. Because the insurance companies receive tax credits, the borrowings do not bear interest. This debt is secured by assets of the subsidiary and letters of credit from an affiliate bank.

Regulations of the Federal Reserve System require reserves to be maintained by all banking institutions according to the types and amounts of certain deposit liabilities. These requirements restrict usage of a portion of the amounts shown as consolidated “Cash and due from banks” from everyday usage in operation of the banks. The minimum reserve requirements for the subsidiary banks at December 31, 2000, totaled $104,681,000.

Cash payments for interest on deposits and borrowings during 2000, 1999 and 1998 on a consolidated basis amounted to $320,071,000, $289,589,000 and $298,643,000, respectively.

INCOME TAXES

Total income taxes for 2000, 1999 and 1998 were allocated as shown in the following tables.

Income tax expense from operations for the years ended December 31, 2000, 1999 and 1998 consists of:

(In thousands)	Current		Deferred			Total
Year ended December 31, 2000:
U.S. federal		$87,648		$ (2,622	)	$85,026
State and local		4,282		39		4,321
		$91,930		$ (2,583	)	$89,347
Year ended December 31, 1999:
U.S. federal		$85,825		$ (7,946	)	$77,879
State and local		3,805		(37	)	3,768
		$89,630		$ (7,983	)	$81,647
Year ended December 31, 1998:
U.S. federal		$61,550		$10,697		$72,247
State and local		3,657		(431	)	3,226
		$65,207		$10,266		$75,473

Income tax expense (benefit) allocated directly to stockholders’ equity for the years ended December 31, 2000, 1999 and 1998 consists of:

(In thousands)	2000		1999		1998
Unrealized gain (loss) on
securities available for sale	$10,467		$(33,278	)	$14,766
Compensation expense for tax
purposes in excess of
amounts recognized for
financial reporting purposes	(901	)	(1,119	)	(1,475	)
Income tax expense
(benefit) allocated to
stockholders’ equity	$ 9,566		$(34,397	)	$13,291

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2000 and 1999 are presented below.

(In thousands)	2000		1999
Deferred tax assets:
Loans, principally due to
allowance for loan losses	$ 52,773		$ 53,017
Unrealized loss on
securities available for sale	–		690
Unearned fee income, due to earlier
recognition for tax purposes	696		610
Deferred compensation,
principally due to accrual for
financial reporting purposes	1,334		1,637
Accrued expenses, principally due to
accrual for financial reporting purposes	3,190		2,168
Net operating loss carryforwards
of acquired companies	99		123
Total gross deferred tax assets	58,092		58,245
Deferred tax liabilities:
Investment securities,
principally due to discount accretion	1,879		2,269
Capitalized interest	804		839
Unrealized gain on
securities available for sale	9,777		–
Land, buildings and equipment,
principally due to write-up in
value in purchase accounting
entries for financial reporting	38,231		33,125
Core deposit intangible, principally
due to purchase accounting entries
for financial reporting	2,478		3,595
Pension benefit obligation, due to
recognition of the excess pension
asset for financial reporting purposes	1,056		1,281
Realignment of corporate entities	29,850		33,850
Other	2,491		2,474
Total gross deferred tax liabilities	86,566		77,433
Net deferred tax liability	$(28,474	)	$(19,188	)

Actual income tax expense differs from the amounts computed by applying the U.S. federal income tax rate of 35% as a result of the following:

(In thousands)		2000			1999			1998
Computed “expected”
tax expense	$	93,772		$	86,751		$	78,947
Increase (reduction) in
income taxes resulting from:
Amortization of goodwill		2,361			1,829			1,716
Tax exempt income		(1,753	)		(2,164	)		(2,334	)
Tax deductible dividends on
allocated shares held by
the Company’s ESOP		(838	)		(777	)		(734	)
Contribution of
appreciated assets		(1,064	)		–			(1,119	)
Federal business credits		(1,776	)		(1,013	)		(810	)
State and local income
taxes, net of federal
income tax benefit		2,808			2,449			2,097
Other, net		(4,163	)		(5,428	)		(2,290	)
Total income tax expense	$	89,347		$	81,647		$	75,473

Cash payments of income taxes, net of refunds and interest received, amounted to $92,247,000, $104,261,000 and $56,220,000 on a consolidated basis during 2000, 1999 and 1998, respectively. The Parent had net receipts of $1,622,000, $2,415,000 and $3,341,000 during 2000, 1999 and 1998, respectively, from tax benefits.

EMPLOYEE BENEFIT PLANS
Employee benefits charged to operating expenses aggregated $29,043,000, $29,351,000 and $25,255,000 for 2000, 1999 and 1998, respectively. Substantially all of the Company’s employees are covered by a noncontributory defined benefit pension plan. Participants are fully vested after five years of service and the benefits are based on years of participation and average annualized earnings. The Company’s funding policy is to make contributions to a trust as necessary to provide for current service and for any unfunded accrued actuarial liabilities over a reasonable period. To the extent that these requirements are fully covered by assets in the trust, a contribution may not be made in a particular year. The following items are components of the net pension cost for the years ended December 31, 2000, 1999 and 1998.

(In thousands)		2000			1999			1998
Service cost-benefits
earned during the year	$	3,164		$	3,678		$	3,329
Interest cost on projected
benefit obligation		4,187			3,940			4,006
Actual plan assets value
(increase) decrease		(5,808	)		(5,397	)		(5,512	)
Net amortization and deferral		(780	)		(696	)		(795	)
Net periodic pension cost	$	763		$	1,525		$	1,028

The following table sets forth the pension plan’s funded status, using valuation dates of September 30, 2000 and 1999.

(In thousands)		2000			1999
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	57,312		$	60,308
Service cost		3,164			3,678
Interest cost		4,187			3,940
Benefits paid		(4,732	)		(4,429	)
Actuarial (gain) loss		(87	)		(6,185	)
Projected benefit obligation at end of year		59,844			57,312
Change in plan assets
Fair value of plan assets at beginning of year		66,430			61,828
Actual return on plan assets		9,878			9,031
Employer contributions		11			–
Benefits paid		(4,732	)		(4,429	)
Fair value of plan assets at end of year		71,587			66,430
Plan assets in excess of projected benefit obligation		11,743			9,118
Unrecognized net (gain) loss from past
experience different from that assumed
and effects of change in assumptions		(6,995	)		(2,836	)
Prior service benefit not yet recognized
in net pension cost		(932	)		(1,076	)
Unrecognized net transition asset
being recognized over 15 years		(1,276	)		(1,915	)
Prepaid pension cost included in other assets	$	2,540		$	3,291

Assumptions used in computing the plan’s funded status were:

	2000		1999		1998
Discount rate	7.75	%	7.75	%	6.75	%
Rate of increase in future
compensation levels	5.70	%	5.70	%	5.70	%
Long-term rate of return on assets	9.00	%	9.00	%	9.00	%

At December 31, 2000, approximately 74% of plan assets were invested in U.S. government bonds, corporate bonds and equities.

In addition to the pension plan, substantially all of the Company’s employees are covered by a contributory defined contribution plan (401K), the Participating Investment Plan. Under the plan, the Company makes matching contributions, which aggregated $3,210,000 in 2000, $3,108,000 in 1999 and $2,692,000 in 1998.

STOCK OPTION PLANS, RESTRICTED STOCK
AWARDS AND DIRECTORS STOCK PURCHASE PLAN*

The Company has reserved 10,201,472 shares of its common stock for issuance under various stock option plans offered to certain key employees of the Company and its subsidiaries. Options are granted, by action of the Board of Directors, to acquire stock at fair market value at the date of the grant, for a term of 10 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS[CONT.]
Commerce Bancshares, Inc. and Subsidiaries

At December 31, 2000, 3,440,356 shares remain available for option grants under these programs. The following tables summarize option activity over the last three years and current options outstanding.

	2000				1999				1998
	Weighted						Weighted				Weighted
			Average				Average				Average
	Shares			Option Price	Shares		Option Price		Shares		Option Price
Outstanding at beginning of year	2,808,794		$24.41		2,642,384		$21.52		2,440,515		$17.35
Granted	558,962			29.10	505,015			34.67	490,804			38.87
Cancelled	(91,742	)		34.35	(33,908	)		34.88	(16,200	)		31.23
Exercised	(227,183	)		18.49	(304,697	)		15.12	(272,735	)		14.79
Outstanding at end of year	3,048,831		$25.42		2,808,794		$24.41		2,642,384		$21.52
				Options Outstanding					Options Exercisable
				Weighted
	Number			Average	Weighted				Number		Weighted
	Outstanding at			Remaining	Average				Exercisable at		Average
Range of Exercise Prices	December 31, 2000		Contractual Life		Exercise Price			December 31, 2000			Exercise Price
$11.06 -$17.63	891,149			2.9 years	$		14.20		891,149		$	14.20
$18.61 -$25.69	734,476			5.7 years			22.67		734,476			22.67
$28.87 -$34.69	977,225			8.6 years			31.61		361,691			32.59
$34.92 -$42.87	445,981			7.2 years			38.76		330,068			38.81
$11.06 -$42.87	3,048,831			6.0 years	$		25.42		2,317,384		$	23.26

The Company has a restricted stock award plan under which 316,594 shares of common stock were reserved, and 143,288 shares remain available for grant at December 31, 2000. The plan allows for awards to key employees, by action of the Board of Directors, with restrictions as to transferability, sale, pledging, or assigning, among others, prior to the end of the restriction period. The restriction period may not exceed 10 years. The Company issued awards totaling 26,422 shares in 2000, 12,748 shares in 1999 and 17,403 shares in 1998, resulting in deferred compensation amounts of $782,000, $439,000 and $687,000, respectively. Approximately $289,000, $322,000 and $276,000 was amortized to salaries expense in 2000, 1999 and 1998, respectively. Unamortized deferred compensation of $1,179,000, $916,000 and $904,000 has been recorded as a reduction of stockholders’ equity at December 31, 2000, 1999 and 1998, respectively.

The Company has a directors stock purchase plan whereby outside directors of the Company and its subsidiaries may elect to use their directors’ fees to purchase Company stock at market value each month end. Remaining shares reserved for this plan total 170,932 at December 31, 2000. In 2000, 19,484 shares were purchased at an average price of $31.57 and in 1999, 18,959 shares were purchased at an average price of $35.60.

The Company applies Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations in accounting for its plans. Accordingly, no compensation expense has been recognized for its stock-based compensation plans other than for restricted stock and performance-based awards. Had compensation cost for the Company’s other stock option plans been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, the Company’s net income and income per share would have been reduced to the pro forma amounts shown below.

(In thousands, except per share data)		2000			1999			1998
Net income
As reported	$	178,574		$	166,213		$	150,091
Pro forma		175,482			162,926			147,144
Basic income per share
As reported		$	2.79		$	2.50		$	2.23
Pro forma			2.75			2.45			2.19
Diluted income per share
As reported		$	2.76		$	2.47		$	2.19
Pro forma			2.71			2.42			2.15

Below are the fair values of options granted using the Black-Scholes option-pricing model and the model assumptions.

	2000			1999			1998
Weighted per share average
fair value at grant date	$8.21		$10.76			$11.80
Assumptions:
Dividend yield	2.0	%		2.0	%		2.0	%
Volatility	24.7	%	24.2		%	24.2		%
Risk-free interest rate	5.1	%		6.8	%		5.0	%
Expected life	4.8 years		5.5 years			6.5 years

*All share and per share amounts in this note have been restated for the 5% stockdividend distributed in 2000.

COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130 requires the reporting of comprehensive income and its components. Comprehensive income is defined as the change in equity from transactions and other events and circumstances from non-owner sources, and excludes investments by and distributions to owners. Comprehensive income includes net income and other items of comprehensive income meeting the above criteria. The Company’s only component of other comprehensive income is the unrealized holding gains and losses on available for sale securities as shown below.

	For the Years Ended December 31
(In thousands)		2000		1999			1998
Unrealized holding gains (losses)	$	24,573	$	(86,680	)	$	44,033
Reclassification adjustment for (gains)
losses included in net income		3,083		(892	)		(5,915	)
Net unrealized gains
(losses) on securities		27,656		(87,572	)		38,118
Income tax expense (benefit)		10,467		(33,278	)		14,766
Other comprehensive income (loss)	$	17,189	$	(54,294	)	$	23,352

SEGMENTS
Management has established three operating segments within the Company. The Consumer segment includes the retailbranch network, consumer finance, bankcard, student loans and discount brokerage services. The Commercial segment provides corporate lending, leasing, and international services, as well as business, government deposit and cash management services. The Money Management segment provides traditional trust and estate tax planning services, and advisory and discretionary investment management services.

The Company’s business line reporting system derives segment information by specifically attributing most assets and income statement items to a segment. The Company’s internal funds transfer pricing methodology allocates a standard cost for funds used or credit for funds provided to all segment assets and liabilities using funding pools. Income and expense that directly relate to segment operations are recorded in the segment when incurred. Expenses that indirectly support the segments are allocated based on the most appropriate method available.

The Company’s reportable segments are strategic lines of business that offer different products and services. They are managed separately because each line services a specific customer need, requiring different performance measurement analyses and marketing strategies.

The following tables present selected financial information by segment and reconciliations of combined segment totals to consolidated totals. There were no material intersegment revenues between the three segments.

SEGMENT INCOME STATEMENT DATA

						Money				Segment		Other/		Consolidated
(In thousands)	Consumer		Commercial			Management				Totals	Elimination			Totals
Year ended December 31, 2000:
Net interest income after loan loss expense	$	22,982	$	331,203		$	(14,091	)	$	340,094	$	105,400		$	445,494
Cost of funds allocation		232,342		(161,215	)		20,110			91,237		(91,237	)		–
Non-interest income		140,068		29,068			72,427			241,563		11,245			252,808
Total net revenue		395,392		199,056			78,446			672,894		25,408			698,302
Non-interest expense		255,491		84,994			55,446			395,931		34,450			430,381
Income before income taxes	$	139,901	$	114,062		$	23,000		$	276,963	$	(9,042	)	$	267,921
Year ended December 31, 1999:
Net interest income after loan loss expense	$	35,025	$	256,489		$	(17,705	)	$	273,809	$	156,857		$	430,666
Cost of funds allocation		198,781		(101,544	)		23,828			121,065		(121,065	)		–
Non-interest income		131,604		27,043			71,318			229,965		6,244			236,209
Total net revenue		365,410		181,988			77,441			624,839		42,036			666,875
Non-interest expense		263,284		79,489			51,531			394,304		24,711			419,015
Income before income taxes	$	102,126	$	102,499		$	25,910		$	230,535	$	17,325		$	247,860
Year ended December 31, 1998:
Net interest income after loan loss expense	$	5,104	$	244,795		$	(18,830	)	$	231,069	$	159,802		$	390,871
Cost of funds allocation		214,894		(98,183	)		23,995			140,706		(140,706	)		–
Non-interest income		114,116		25,840			65,300			205,256		8,781			214,037
Total net revenue		334,114		172,452			70,465			577,031		27,877			604,908
Non-interest expense		232,685		74,167			45,616			352,468		26,876			379,344
Income before income taxes	$	101,429	$	98,285		$	24,849		$	224,563	$	1,001		$	225,564

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS[CONT.]
Commerce Bancshares, Inc. and Subsidiaries

The segment activity, as shown on the previous page, includes both direct and allocated items. Amounts in the “Other/Elimination” column include activity not related to the segments, such as that relating to administrative functions, and the effect of certain expense allocations to the segments.

SEGMENT BALANCE SHEET DATA

				Money		Segment		Other/		Consolidated
(In thousands)	Consumer	Commercial		Management		Totals	Elimination			Totals
Average balances for 2000:
Assets	$3,644,089		$4,343,668		$125,585	$8,113,342		$2,905,788			$11,019,130
Loans	3,490,109		4,310,237		405	7,800,751		1,290			7,802,041
Deposits	7,139,953		1,774,740		8,978	8,923,671		17,723			8,941,394
Average balances for 1999:
Assets	$3,677,667		$3,741,466		$ 88,945	$7,508,078		$3,596,386			$11,104,464
Loans	3,510,062		3,711,447		2,659	7,224,168		(7,301	)		7,216,867
Deposits	7,408,465		1,854,732		28,240	9,291,437		(31,895	)		9,259,542

The above segment balances include only those items directly associated with the segment. The “Other/Elimination” column includes unallocated bank balances not associated with a segment (such as investment securities, federal funds sold, goodwill and core deposit premium), balances relating to certain other administrative and corporate functions, and eliminations between segment and non-segment balances. This column also includes the resulting effect of allocating such items as float, deposit reserve and capital for the purpose of computing the cost or credit for funds used/provided.

COMMON STOCK
On December 15, 2000, the Company distributed a 5% stock dividend on its $5 par common stock for the seventh consecutive year. All per share data in this report has been restated to reflect the stock dividend. The table below is a summary of share activity in 2000.

Purchases of common stock	2,996,001
Issuance of stock:
Sales under employee and director plans	222,350
5% stock dividend	2,976,780

Basic income per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the year. Diluted income per share gives effect to all dilutive potential common shares that were outstanding during the year. The shares used in the calculation of basic and diluted income per share, which have been restated for all stock dividends, are as follows:

	For the Years Ended December 31
(In thousands)	2000	1999	1998
Weighted average common
shares outstanding	63,920	66,551	67,327
Stock options	735	874	1,143
	64,655	67,425	68,470

Under a Rights Agreement dated August 23, 1988, as amended in the amended and restated rights agreement with Commerce Bank, N.A. as rights agent, dated as of July 19, 1996, certain rights have attached to the common stock. Under certain circumstances relating to the acquisition of, or tender offer for, a specified percentage of the Company’s outstanding common stock, holders of the common stock may exercise the rights and purchase shares of Series A Preferred Stock or, at a discount, common stock of the Company or an acquiring company.

In February 2000, the Board of Directors approved additional purchases of the Company’s common stock, bringing the total purchase authorization to 3,000,000 shares. The Company has routinely used these reacquired shares to fund employee benefit programs and annual stock dividends. Approximately 2,683,000 shares have been acquired under the 2000 approval through December 31, 2000.

REGULATORY CAPITAL REQUIREMENTS
The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that could have a direct material effect on the Company’s financial statements. The regulations require the Company to meet specific capital adequacy guidelines that involve quantitative measures of the Company’s assets, liabilities and certain

off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital classification is also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of Tier 1 capital to total average assets (leverage ratio), and minimum ratios of Tier 1 and Total capital to risk-weighted assets (as defined). The minimum required ratios for well-capitalized banks are 6.00% for Tier 1 capital, 10.00% for Total capital and 5.00% for the leverage ratio.

The Company’s actual capital amounts and ratios at the last two year ends are as follows:

(Dollars in thousands)	2000		1999
Risk-Weighted Assets	$8,889,195		$8,678,987
Tier 1 Capital	$1,070,491		$1,014,071
Total Capital	$1,187,865		$1,127,005
Tier 1 Capital Ratio	12.04	%	11.68	%
Total Capital Ratio	13.36	%	12.99	%
Leverage Ratio	9.91	%	9.17	%

Management believes that, at December 31, 2000, the Company meets all capital requirements to which it is subject.

FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of estimated fair values for financial instruments held by the Company. Fair value estimates, methods and assumptions are set forth below.

LOANSFair values are estimated for various groups of loans segregated by 1) type of loan, 2) fixed/adjustable interest terms and 3) performing/non-performing status. The fair value of performing loans is calculated by discounting all simulated cash flows. Cash flows include all principal and interest to be received, taking embedded optionality such as the customer’s right to prepay into account. Discount rates are computed for each loan category using implied forward market rates adjusted to recognize each loan’s approximate credit risk. Fair value of non-accrual loans approximates their carrying value because such loans are recorded at the appraised or estimated recoverable value of the collateral or the underlying cash flow.

The “Carrying Amount” of loans in the following schedule excludes deferred or unamortized fees and costs related to the loan transaction.

INVESTMENT SECURITIESThe fair values of the debt and equity instruments in the available for sale and trading sections of the investment security portfolio are estimated based on prices published in financial newspapers or bid quotations received from securities dealers. The fair value of those equity investments for which a market source is not readily available is estimated at carrying value.

A schedule of investment securities by category and maturity is provided in the Investment Securities note to the consolidated financial statements. Fair value estimates are based on the value of one unit without regard to any premium or discount that may result from concentrations of ownership, possible tax ramifications or estimated transaction costs.

FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND CASH AND DUE FROM BANKSThe carrying amounts of federal funds sold and securities purchased under agreements to resell and cash and due from banks approximate fair value. Federal funds sold and securities purchased under agreements to resell generally mature in 90 days or less.

DEPOSITSStatement 107 specifies that the fair value of deposits with no stated maturity is equal to the amount payable on demand. Such deposits include savings and interest and non-interest bearing demand deposits. These fair value estimates do not recognize any benefit the Company receives as a result of being able to administer, or control, the pricing of these accounts. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. Discount rates are based on the Company’s approximate cost of obtaining similar maturity funding in the market.

BORROWINGSFederal funds purchased and securities sold under agreements to repurchase mature or reprice within 90 days; therefore, their fair value approximates carrying value. The fair value of long-term debt is estimated by discounting contractual maturities using an estimate of the current market rate for similar instruments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS[CONT.]
Commerce Bancshares, Inc. and Subsidiaries

The estimated fair values of the Company’s financial instruments are as follows:

		2000			1999
	Carrying		Estimated	Carrying		Estimated
(In thousands)	Amount		Fair Value	Amount		Fair Value
FINANCIAL ASSETS
Loans	$7,890,774		$7,868,962	$7,566,363			$7,489,108
Available for sale investment securities	1,864,991		1,864,991	2,451,785			2,451,785
Trading account securities	20,674		20,674	23,639			23,639
Other non-marketable securities	55,238		55,238	32,991			32,991
Federal funds sold and securities purchased under
agreements to resell	241,835		241,835	238,602			238,602
Cash and due from banks	616,724		616,724	685,157			685,157
FINANCIAL LIABILITIES
Non-interest bearing demand deposits	$1,564,907		$1,564,907	$1,584,333			$1,584,333
Savings and interest bearing demand deposits	5,049,729		5,049,729	5,154,506			5,154,506
Time open and C.D.’s:
Maturing in year 1	1,664,262		1,655,580	1,829,817			1,811,889
Maturing in year 2	613,670		609,585	364,858			359,744
Maturing in year 3	91,454		90,776	110,624			109,073
Maturing in year 4	50,655		50,222	61,218			60,354
Maturing in year 5	43,021		42,618	48,265			47,543
Maturing in over 5 years	4,040		3,996	10,502			10,335
Federal funds purchased and securities
sold under agreements to repurchase	543,874		543,874	1,042,429			1,042,429
Long-term debt and other borrowings	224,684		222,444	25,735			19,097

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTSThe fair value of letters of credit and commitments to extend credit is based on the fees currently charged to enter into similar agreements. The aggregate of these fees is not material.

The Company enters into foreign exchange contracts both to facilitate customer business and to manage the resultant risk. The Company maintains a generally matched position to minimize currency fluctuation exposure. Interest rate swap contracts are entered into by the Company to limit its interest rate risk. The fair value of these contracts is determined by contacting appropriate brokers for the current cost of selling, purchasing or closing out the various contracts. The fair values of the foreign exchange contracts and interest rate swaps are not material.

These instruments are also referenced in the consolidated financial statements notes on Financial Instruments with Off-Balance-Sheet Risk or Loans and Allowance for Losses.

LIMITATIONSFair value estimates are made at a specific point in time based on relevant market information. They do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for many of the Company’s financial instruments, fair value estimates are based on judgments regarding futureexpected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties and cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

FINANCIAL INSTRUMENTS
WITH OFF-BALANCE-SHEET RISK

The Company engages in various transactions with off-balance-sheet risk in the normal course of business to meet customer financing needs. The Company uses the same credit policies in making the commitments and conditional obligations described below as it does for on-balance-sheet instruments. The contractual or notional amounts of financial instruments with off-balance-sheet risk at December 31 were:

(In thousands)	2000	1999
Commitments to extend credit:
Credit card	$2,430,071	$2,437,851
Other	2,872,555	3,044,918
Commitments to purchase/sell
when-issued securities	–	8,083
Standby letters of credit,
net of participations	302,177	246,501
Commercial letters of credit	49,274	31,590
Foreign exchange contracts:
Forward contracts	195,519	96,878
Options written/purchased	1,936	1,128
Spot contracts	25,255	4,906
Interest rate swaps	21,039	23,065

Commitments to extend credit are legally binding agreements to lend to a borrower providing there are no violations of any conditions established in the contract. As many of the commitments are expected to expire without being drawn upon, the total commitment does not necessarily represent future cash requirements. Refer to the consolidated financial statements note on Loans and Allowance for Losses for further discussion.

Issuance of standby and commercial letters of credit beneficially assist customers engaged in a wide range of commercial enterprise and international trade. Standby letters of credit serve as payment assurances to a third party in the event the bank’s customer fails to perform its financial and/or contractual obligations. Most expire over the next 12 months and are secured by 1) a line of credit with, 2) a certificate of deposit held by, 3) marketable securities held by, or 4) a deed of trust held by a banking subsidiary. Commercial letters of credit generally finance the purchase of imported goods and provide a payment engagement against presentation of documents meeting the terms and conditions set forth in the letter of credit instrument.

Transactions involving securities described as “when-issued” are treated as conditional transactions in a security authorized for issuance but not yet actually issued. Purchases and sales of when-issued securities for which settlement date has not occurred are not to be reflected in the financial statements until settlement date.

Foreign exchange contracts are commitments to purchase or deliver foreign currency on a specified date at a specified exchange rate. The Company enters into foreign exchange contracts primarily to enable customers involved in international business to hedge their exposure to foreign currency fluctuations, and to minimize the Company’s related exposure arising in connection with these customer transactions. The Company maintains a generally matched position. Risk arises primarily from non-performance by the counterparty, in which case the currency must be bought or sold at the prevailing market rate. In addition, the Company uses foreign exchanges contracts, to a limited extent, for trading purposes including taking proprietary positions. Due to the size of proprietary positions, exchange rate and other market risks are minimal. The Company also enters into interest rate swaps to limit its interest rate risk. Interest rate swaps are contractual agreements between counterparties to exchange fixed and floating rate payment obligations over a set period of time. The current credit exposure (or replacement cost) across all off-balance-sheet derivative contracts covered by the risk-based capital standards was $5,816,000 at December 31, 2000.

COMMITMENTS AND CONTINGENCIES
The Company leases certain premises and equipment, all of which were classified as operating leases. The rent expense under such arrangements amounted to $3,697,000, $3,432,000 and $3,054,000 in 2000, 1999 and 1998, respectively. A summary of minimum lease commitments follows:

(In thousands)	Type of Property
Years Ended December 31	Real Property	Equipment	Commitments
2001	$ 2,873	$505	$ 3,378
2002	2,430	352	2,782
2003	2,088	349	2,437
2004	1,673	260	1,933
2005	1,441	1	1,442
After	$14,607	–	$14,607
Total minimum lease payments			$26,579

All leases expire prior to 2055. It is expected that in the normal course of business, leases that expire will be renewed or replaced by leases on other properties; thus, the future minimum lease commitments will not be less than the amounts shown for 2000.

The Company incurred expense of $17,381,000 in 2000, $17,537,000 in 1999 and $15,248,000 in 1998 under an agreement to outsource certain data processing services. Future payments will adjust for inflation and transaction volume.

In the normal course of business, the Company had certain lawsuits pending at December 31, 2000. In the opinion of management, after consultation with legal counsel, none of these suits will have a significant effect on the financial condition and results of operations of the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS[CONT.]
Commerce Bancshares, Inc. and Subsidiaries

PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
Following are the condensed financial statements of Commerce Bancshares, Inc. (Parent only) for the periods indicated:

CONDENSED BALANCE SHEETS

		December 31
(In thousands)	2000			1999
ASSETS
Investment in consolidated subsidiaries:
Banks	$ 958,531			$ 923,213
Non-banks	34,140			31,114
Investment in unconsolidated subsidiaries	13,155			11,753
Receivables from subsidiaries, net of borrowings	13,005			6,807
Cash	91			195
Securities purchased under agreements to resell	8,505			5,918
Investment securities:
Available for sale	119,105			103,344
Other non-marketable	4,999			4,009
Other assets	9,468			7,657
Total assets	$1,160,999			$1,094,010
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable, accrued taxes and other liabilities	$     17,244			$     14,178
Total liabilities	17,244			14,178
Stockholders’ equity	1,143,755		1,079,832
Total liabilities and stockholders’ equity	$1,160,999			$1,094,010

CONDENSED STATEMENTS OF INCOME

	For the Years Ended December 31
(In thousands)	2000		1999		1998
INCOME
Dividends received from consolidated subsidiaries:
Banks	$154,500		$103,910		$142,316
Non-banks	200		169		379
Earnings of consolidated subsidiaries, net of dividends	25,133		62,590		8,317
Interest on investment securities	4,141		3,927		4,198
Interest on securities purchased under agreements to resell	414		321		316
Management fees charged subsidiaries	28,155		22,743		20,719
Net gains (losses) on securities transactions	237		(53	)	1,101
Other	5,908		5,670		2,130
Total income	218,688		199,277		179,476
EXPENSE
Salaries and employee benefits	26,107		21,249		19,854
Professional fees	2,644		2,378		2,647
Data processing fees paid to affiliates	3,337		2,436		1,164
Marketing	331		491		519
Other	9,453		8,720		7,398
Total expense	41,872		35,274		31,582
Income tax expense (benefit)	(1,758	)	(2,210	)	(2,197	)
Net income	$178,574		$166,213		$150,091

CONDENSED STATEMENTS OF CASH FLOWS

		For the Years Ended December 31
(In thousands)		2000			1999			1998
OPERATING ACTIVITIES
Net income	$	178,574		$	166,213		$	150,091
Adjustments to reconcile net income to net
cash provided by operating activities:
Earnings of consolidated subsidiaries, net of dividends		(25,133	)		(62,590	)		(8,317	)
Other adjustments, net		(496	)		7,648			2,168
Net cash provided by operating activities		152,945			111,271			143,942
INVESTING ACTIVITIES
(Increase) decrease in investment in subsidiaries, net		107			(103	)		(3	)
(Increase) decrease in receivables from subsidiaries, net of borrowings		(6,198	)		252			3,524
Proceeds from sales of investment securities		7,533			3,374			6,994
Proceeds from maturities of investment securities		374,779			451,473			432,963
Purchases of investment securities	(392,570		)		(452,352	)		(471,530	)
Net (increase) decrease in securities purchased under agreements to resell		(2,587	)		1,084			98
Net purchases of equipment		(1,178	)		(1,080	)		(526	)
Net cash provided (used) by investing activities		(20,114	)		2,648			(28,480	)
FINANCING ACTIVITIES
Purchases of treasury stock		(98,720	)		(81,648	)		(85,132	)
Issuance under stock purchase, option and benefit plans		3,398			3,486			3,737
Cash dividends paid on common stock		(37,613	)		(36,054	)		(33,742	)
Net cash used by financing activities		(132,935	)		(114,216	)		(115,137	)
Increase (decrease) in cash		(104	)		(297	)		325
Cash at beginning of year		195			492			167
Cash at end of year	$	91		$	195		$	492

Dividends paid by the Parent were substantially provided from subsidiary bank dividends. The subsidiary banks may distribute dividends without prior regulatory approval that do not exceed the sum of net income for the current year and retained net income for the preceding two years, subject to maintenance of minimum capital requirements. The Parent charges fees to its subsidiaries for management services provided, which are allocated to the subsidiaries based primarily on total average assets. The Parent makes advances to non-banking subsidiaries and subsidiary bank holding companies. Advances are made to the Parent by subsidiary bank holding companies for investment in temporary liquid securities. Interest on such advances is based on market rates.

At December 31, 2000, the Parent had a $20,000,000 line of credit for general corporate purposes with a subsidiary bank. During 2000, the Parent had no borrowings from the subsidiary bank.

Investment securities held by the Parent, which consist primarily of common stock and commercial paper, included an unrealized gain in fair value of $31,300,000 at December 31, 2000. The corresponding net of tax unrealized gain included in stockholders’ equity was $19,407,000. Also included in stockholders’ equity was the unrealized net of tax loss in fair value of investment securities held by subsidiaries, which amounted to $3,440,000 at December 31, 2000.

INDEPENDENT AUDITORS’ REPORT
Commerce Bancshares, Inc. and Subsidiaries

The Board of Directors
Commerce Bancshares, Inc.:

We have audited the accompanying consolidated balance sheets of Commerce Bancshares, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2000. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Commerce Bancshares, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.

January 31, 2001
Kansas City, Missouri

STATEMENT OF MANAGEMENT’S RESPONSIBILITY
Commerce Bancshares, Inc. and Subsidiaries

FINANCIAL STATEMENTSCommerce Bancshares, Inc. is responsible for the preparation, integrity, and fair presentation of its published financial statements. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and, as such, include amounts based on judgments and estimates of management.

INTERNAL CONTROL STRUCTURE OVER FINANCIAL REPORTINGManagement is responsible for establishing and maintaining an effective internal control structure over financial reporting. The system contains monitoring mechanisms, and actions are taken to correct deficiencies identified.

There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions over time, the effectiveness of an internal control system may vary.

Management assessed its internal control structure over financial reporting as of December 31, 2000. This assessment was based on criteria for effective internal control over financialreporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that Commerce Bank, N.A. (Missouri), Commerce Bank, N.A. (Illinois) and Commerce Bank, N.A. (Kansas) maintained effective internal control structures over financial reporting as of December 31, 2000.

COMPLIANCE WITH LAWS AND REGULATIONS
Management is also responsible for compliance with the federal and state laws and regulations concerning dividend restrictions and federal laws and regulations concerning loans to insiders as designated by the FDIC as safety and soundness laws and regulations.

Management assessed its compliance with the designated laws and regulations relating to safety and soundness. Based on this assessment, management believes that Commerce Bank, N.A. (Missouri), Commerce Bank, N.A. (Illinois) and Commerce Bank, N.A. (Kansas), subsidiary insured depository institutions of Commerce Bancshares, Inc., complied, in all significant respects, with the designated laws and regulations related to safety and soundness for the year ended December 31, 2000.

SUMMARY OF QUARTERLY STATEMENTS OF INCOME
Years Ended December 31, 2000, 1999 and 1998

					For the Quarter Ended
(In thousands, except per share data)		12/31/00			9/30/00			6/30/00			3/31/00
Interest income	$	206,095		$	206,771		$	202,472		$	196,830
Interest expense		(86,329	)		(86,087	)		(81,462	)		(77,637	)
Net interest income		119,766			120,684			121,010			119,193
Non-interest income		67,839			64,182			63,991			56,796
Salaries and employee benefits		(55,723	)		(55,107	)		(54,963	)		(54,863	)
Other expense		(54,035	)		(54,958	)		(50,635	)		(50,097	)
Provision for loan losses		(8,067	)		(8,216	)		(10,211	)		(8,665	)
Income before income taxes		69,780			66,585			69,192			62,364
Income taxes		(23,557	)		(21,092	)		(23,589	)		(21,109	)
Net income	$	46,223		$	45,493		$	45,603		$	41,255
Net income per share – basic*	$	.73		$	.72		$	.71		$	.63
Net income per share – diluted*	$	.72		$	.71		$	.70		$	.63
Weighted average shares – basic*		62,807			63,458			64,273			65,158
Weighted average shares – diluted*		63,665			64,237			64,969			65,764
					For the Quarter Ended
(In thousands, except per share data)		12/31/99			9/30/99			6/30/99			3/31/99
Interest income	$	192,561		$	189,412		$	184,155		$	184,498
Interest expense		(72,788	)		(70,420	)		(69,085	)		(72,332	)
Net interest income		119,773			118,992			115,070			112,166
Non-interest income		60,584			56,733			61,436			57,456
Salaries and employee benefits		(54,640	)		(53,183	)		(53,369	)		(54,025	)
Other expense		(52,401	)		(51,483	)		(51,238	)		(48,676	)
Provision for loan losses		(9,751	)		(8,293	)		(8,741	)		(8,550	)
Income before income taxes		63,565			62,766			63,158			58,371
Income taxes		(19,212	)		(21,362	)		(21,387	)		(19,686	)
Net income	$	44,353		$	41,404		$	41,771		$	38,685
Net income per share – basic*	$	.68		$	.62		$	.63		$	.57
Net income per share – diluted*	$	.67		$	.62		$	.61		$	.57
Weighted average shares – basic*		65,821			66,267			66,832			67,303
Weighted average shares – diluted*		66,619			67,101			67,739			68,263
					For the Quarter Ended
(In thousands, except per share data)		12/31/98			9/30/98			6/30/98			3/31/98
Interest income	$	187,299		$	183,468		$	180,151		$	177,553
Interest expense		(75,429	)		(76,863	)		(74,955	)		(73,479	)
Net interest income		111,870			106,605			105,196			104,074
Non-interest income		57,667			50,670			55,741			49,959
Salaries and employee benefits		(51,061	)		(48,644	)		(49,879	)		(48,506	)
Other expense		(52,583	)		(43,301	)		(43,455	)		(41,915	)
Provision for loan losses		(6,971	)		(7,777	)		(11,410	)		(10,716	)
Income before income taxes		58,922			57,553			56,193			52,896
Income taxes		(18,522	)		(19,839	)		(18,699	)		(18,413	)
Net income	$	40,400		$	37,714		$	37,494		$	34,483
Net income per share – basic*	$	.60		$	.56		$	.56		$	.51
Net income per share – diluted*	$	.59		$	.55		$	.55		$	.50
Weighted average shares – basic*		67,370			66,986			67,662			67,293
Weighted average shares – diluted*		68,447			68,048			68,889			68,499

* Restated for the 5% stock dividend distributed in 2000.

COMMUNITY DIRECTORS

The business and civic leaders who serve as our Community Bank Directors are not only business ambassadors, but vital monitors of the community pulse as well. Though they are an essential part of our business development efforts, they also have earned their positions as key contributors to community development. We see this relationship between Commerce and community as central to growth. Feel free to contact any of our directors through your nearest Commerce Bank.

ST. LOUIS
METROPOLITAN REGION

Douglas A. Albrecht
Centric Group

Adrian N. Baker, II
Adrian Baker & Company

James K. Berthold
Sunnen Products Company

Joseph Forshaw, IV
Forshaw’s

James G. Forsyth, III
Moto, Inc.

Harold F. Helmkampf
Harold F. Helmkampf General Contractor, Inc.

Paul F. Hummer
A P Green Industries, Inc.

David W. Kemper
Commerce Bancshares, Inc.
Commerce Bank, N.A.

Alois J. Koller, Jr.
Koller Enterprises, Inc.

Seth M. Leadbeater
Commerce Bancshares, Inc.
Commerce Bank, N.A.

Ronald K. Lohr
Lohr Distributing Co., Inc.

Arthur E. Lottes, III
A.E. Lottes Company

John B. Morgan
Subsurface Constructors, Inc.

Thomas M. Noonan
Commerce Bank, N.A.

Jerome M. Rubenstein
Bryan Cave, LLP

James E. Schiele
St. Louis Screw & Bolt Company

William A. Sullins, Jr.
Commerce Bancshares, Inc.
Commerce Bank, N.A.

Timothy K. Swank
Swank Motion Pictures, Inc.

Gregory B. Vatterott
Charles F. Vatterott & Co.

Earl E. Walker
Carr Lane Manufacturing Co.

Kelvin R. Westbrook
Millennium Digital Media

ST. LOUIS
EAST REGION

Tino D. DiFranco
Lucky Strike Bowling Lanes

Reverend William G. Gillespie
Cote Brilliante Presbyterian Church

J.L. (Juggie) Hinduja
Sinclair Industries, Inc.

Michael E. Kennedy
Kennedy Associates, Inc.

Myron J. Klevens
Restaurant Consulting, Inc.

Joseph A. Wotka
Wotka Properties

ST. LOUIS
CENTRAL REGION

Hugh O. Bissell
Hugh Bissell Insurance Co.

Cyrus Blackmore
Blackmore & Glunt, Inc.

Donald Gerber
Gerber Chapel

Herbert S. Jones
Messenger Printing & Publishing, Inc.

Daniel P. Leach
P.M. Leach Painting Co.

Stephen Mattis
Allied Industrial Equipment Corp.

Lisa D. McLaughlin
Partner; Lewis, Rice and Fingersh

Richard C. Mueller, Jr.
Bopp Funeral Chapel

Carl A. Ruasch
Lutheran Senior Services

ST. LOUIS
WEST REGION

Richard K. Brunk
Attorney at Law

James N. Foster, Jr.
McMahon, Berger, Hanna,
Linihan, Cody & McCarthy

Richard E. Hrabko
Spirit of St. Louis Airport

Stuart Krawll
Beam of St. Louis, Inc.

Gary Olson
St. Luke’s Hospital

Jim Shubert
Shubert Design

Lawrence J. Siegel
Hochschild, Bloom & Co., LLP

Bill Voss
American Family Insurance

ST. LOUIS
ST. CHARLES COUNTY

Thomas J. Barklage
Barklage, Barklage, Brett,
Martin & Wibbenmeyer

Jill Greer Baue
Baue Funeral Homes

David R. Demien
Demien Construction Co.

Kevin F. Kast
St. Joseph Health Center

Peter J. Mihelich, Jr.
Goellner Printing, Inc.

Ronald W. Ohmes
Kirchner Block & Brick, Inc.

David W. Otto
Handyman Hardware

Tarlton J. Pitman
Pitman Funeral Home, Inc.

Donald E. Schappe
O’Fallon True Value Hardware

Vincent A. Schneider, Jr.
St. Charles Clinic

COMMUNITY DIRECTORS[CONT.]

William B. Schuman

Gold Star Paving

Brenda Wetter Ward

Hackmann Lumber Company

William J. Zollmann, III

Attorney at Law

Donald J. Zykan, Jr.

Zykan Properties & Investments

ST. LOUIS SOUTH REGION

Dr. Maria C. Albano

Physician

Charles H. Baechle

Plastic Veneers, Inc.

L. Raymond Bequette

Retired

Donald Hawkins

8-D Corporation

John W. Howald

Thurman, Howald, Weber, Senkel & Norrick

Dr. Richard McMullin

Prudential Individual Financial Services

Louis J. Naeger

Naeger & Associates

KANSAS CITY

METROPOLITAN REGION

Kevin G. Barth

Commerce Bancshares, Inc.

Commerce Bank, N.A.

Thomas M. Bloch

University Academy

John O. Brown

Retired

Commerce Bancshares, Inc.

Lee A. Derrough

Hunt Midwest Enterprises, Inc.

Stephen D. Dunn

J. E. Dunn Construction Company

Brian D. Everist

Intercontinental Engineering

Manufacturing Corporation

Anita B. Gorman

Missouri Department of Conservation

C. L. William Haw

National Farms, Inc.

Robert W. Honse

Farmland Industries, Inc.

Jonathan M. Kemper

Commerce Bancshares, Inc.

Commerce Bank, N.A.

Emil E. Lansu

Bayer Corporation

John T. Lockton, III

Lockton Companies, Inc.

F. Lee Major, III

Major Cadillac Co., Inc.

John N. McConnell

Labconco Corporation

Dennis A. Mullin

Steel & Pipe Supply Co., Inc.

Edward J. Reardon, II

Commerce Bank, N.A.

Robert J. Reintjes, Sr.

George P. Reintjes Company, Inc.

Lamson Rheinfrank, Jr.

BHA Group Holdings, Inc.

Laidacker M. Seaberg

Midwest Grain Products, Inc.

Charles S. Sosland

Sosland Companies, Inc.

Warren W. Weaver

Retired

Commerce Bancshares, Inc.

Hugh J. Zimmer

The Zimmer Companies

HARRISONVILLE

Robert W. Atkinson

Retired

Connie Aversman

Commerce Bank, N.A.

Marvin Burris

Retired

Larry Dobson

Quality Raymore Rentals

Elvin S. Douglas, Jr.

Crouch, Spangler & Douglas

Martin E. Ismert

Sioux Chief Mfg. Co., Inc.

William James

Inland Newspaper Machinery, Corp.

William Mills

Family Center of Harrisonville

J. Harold Smith

J. Harold Smith Realty, Inc.

LEAVENWORTH

J. Sanford Bushman

BCC Business Svcs, Inc.

Norman B. Dawson

Retired

Commerce Bank, N.A.

David A. Greenamyre

Greenamyre Rentals, Inc.

Stephen J. Kempf

Armed Forces Insurance Exchange

James H. Linn

Retired

Commerce Bancshares, Inc.

Dr. Jeanette Lozenski

Saint John Hospital

John Douglas McCrary

Hallmark Cards

Ivan J. Meyer

Retired

Commerce Bank, N.A.

Bill Petrie

Commerce Bank, N.A.

Edward J. Reardon, II

Commerce Bank, N.A.

James R. Rucker

Commerce Bank, N.A.

JOHNSON COUNTY

Kevin G. Barth

Commerce Bancshares, Inc.

Commerce Bank, N.A.

Becky Blades

Blades & Associates

Tom P. Carrico

Gill Studios, Inc.

Robert E. Choun

Metro Air Conditioning Co.

Richard Cray, Jr.

Premier Wine & Spirits, Inc.

Isak Federman

F & G Investment

Chris Herre

Rose Construction

Michael J. McNicoll

McNicoll Developments, Inc.

Craig Patterson

Eskridge, Inc.

Greg Preib

Greg Prieb Homes, Inc.

Edward J. Reardon, II

Commerce Bank, N.A.

Tom Rendleman

Trend Plastics, Inc.

Carl E. Seaton

Seaton Van Lines, Inc.

Brian Smith

Attorney at Law

LAWRENCE

John W. Brand, Jr.

Stevens & Brand, LLP

Martin B. Dickinson, Jr.

Barber, Emerson

Sidney A. Garrett

Brown Cargo Van

Mark Gonzales

Commerce Bank, N.A.

Donald A. Johnston

Commerce Bank, N.A.

Martin W. Moore

Advanco, Inc.

Edward J. Reardon, II

Commerce Bank, N.A.

Delbert Shankel

University of Kansas

Dan Simons

The World Company

Michael Treanor

Michael Treanor Architects

Warren W. Weaver

Retired

Commerce Bancshares, Inc.

CENTRAL ILLINOIS

BLOOMINGTON

Andrew F. Anderson

Commerce Bank, N.A.

Dale L. Ernst

Farmer

George A. Farnsworth

Farnsworth and Wylie

Robert T. Fleming

Fleming Law Office

Ronald R. Guthoff

Guthoff & Company

Parker Kemp

Commerce Bank, N.A.

Richard A. Lenahan

Retired

William W. McKnight, III

William McKnight Associates Inc.

Ollie Myers

Myers, Inc.

Vincent J. Nooney

Commerce Bancshares, Inc.

David K. Stark

Stark Excavating, Inc.

CENTRAL ILLINOIS

PEORIA

Bruce Alkire

The Finch Companies

Daniel J. Altorfer

United Facilities

Larry E. Clore

Multi-Ad Services, Inc.

Joseph Henderson

Commerce Bank, N.A.

T. Jack Huggins

Williams Ethanol Services, Inc.

Lewis Martin, Jr.

Retired

Vincent J. Nooney

Commerce Bancshares, Inc.

Timothy F. Shea

Shea Property Management

Thomas E. Spurgeon

Lincoln Office Supply Company

Terry N. Thorstenson

Caterpillar, Inc.

CENTRAL ILLINOIS

TAZEWELL COUNTY

Ralph Brower

Retired

Brian Cahill

Midwest Grain Products

Frank H. Mackaman

Dirksen Congressional Center

Carol Shields

Pekin Chamber of Commerce

SPRINGFIELD

Roger Campbell

Campbell Ford-Mercury, Inc.

Kenneth L. Carter

Rankin & Company

Lester B. Cox

Modern Tractor & Supply Co.

Joe C. Greene

Greene & Curtis, LLP

Bunch Greenwade

Midwest Plant Food Co./Rancher

Robert A. Hammerschmidt, Jr.

Commerce Bank, N.A.

Donald G. Martin, Jr.

E. A. Martin Machinery Company

Mary Kay Meek

Try-Meek, Inc.

Alvin D. Meeker

Commerce Bank, N.A.

James F. Moore

Corning Cable Systems, LLC

Lawrence P. Mueller

Investments

Robert B. Murray, Jr.

R. B. Murray Company

William A. Sullins, Jr.

Commerce Bancshares, Inc.

Commerce Bank, N.A.

BOLIVAR

Barry S. Bishop

Alltel Communications

Charles Fraser

Investments

Mick Hood

Farmers Insurance Group

Robert Moreland

Commerce Bank, N.A.

Ed Peterson

Century 21-Peterson Real Estate

Gary Stewart

Retired

Dr. C. Pat Taylor

Southwest Baptist University

R. D. Vestal

Vestal Equipment Co. Inc.

MIDSTATE MISSOURI

Ben Ames

Executive Aircraft Corp.

Daniel Atwill

Atwill & Montgomery

Tim Brubaker

Commerce Bank, N.A.

Morris F. Burger

Burger’s Country Cured Hams

COMMUNITY DIRECTORS[CONT.]

Steve Erdel

Commerce Bank, N.A.

Jerry Halterman

Halterman & Associates

Joe Hartman

Commerce Bank, N.A.

Ed Hert

Commerce Bank, N.A.

Ron Hopkins

Commerce Bank, N.A.

Jack W. Knipp

Knipp Enterprises

David A. Machens

Machens Enterprises

Teresa Maledy

Commerce Bank, N.A.

Vincent J. Nooney

Commerce Bancshares, Inc.

Mike Petrie

Commerce Bancshares, Inc.

Robert K. Pugh

MBS Textbook Exchange

James Rolls

Associated Electric Cooperative

James Schatz

Commerce Bank, N.A.

Dr. Pallop Siripipat

Mexico Women’s Health Specialists

Col. C. R. Stribling, III

Missouri Military Academy

William A. Sullins, Jr.

Commerce Bancshares, Inc.

Commerce Bank, N.A.

Jack Waters

Tribune Publishing Company

Larry D. Webber

Webber Pharmacy

Dr. John S. Williams

Horton Animal Hospital

WICHITA

Stanley R. Ahlerich

Rancher/Farming

Michael E. Bukaty

Latshaw Enterprises, Inc.

John C. Clevenger

Commerce Bank, N.A.

Monte A. Cook

Commerce Bank, N.A.

Thomas E. Dondlinger

Dondlinger & Sons Construction Co., Inc.

Andrew E. Gore

Gore Oil Company

John G. Himmel

Commerce Bank, N.A.

Jack B. Hinkle

Hinkle Oil Company

David D. Hodge

Commerce Bank, N.A.

Ronald W. Holt

KGE/Western Resources

Fran D. Jabara

Jabara Ventures Group

Jonathan M. Kemper

Commerce Bancshares, Inc.

Commerce Bank, N.A.

Fritz R. Krohmer

Commerce Bank, N.A.

Randolph D. Love

The Love Box Company, Inc.

Derek L. Park

PMS Foods, Inc.

Clifford W. Stone

Commerce Bank, N.A.

Thomas D. White

White & Ellis Drilling, Inc.

DERBY

James Coffey

Coffey Insurance

Thomas Kemp

Kemp Construction

Steve M. Peterson

Commerce Bank, N.A.

Ray G. Warren

The Warren Company

Troy Wayman

Pro CarWash Systems

BUTLER COUNTY

(EL DORADO)

Eugene S. Adams

Retired

Ray L. Connell

Connell & Connell

Dallas Flowers

Flowers Production Co., Inc.

Terry R. Neher

Commerce Bank, N.A.

Dr. Jackie Vietti

Butler County Community College

HUTCHINSON

Mike Ringwald

Farmer (Ellenwood, KS)

Dale J. Smith

J & J Drainage Products Co.

Jon H. Starks

Commerce Bank, N.A.

COWLEY COUNTY

Kent Miller

Farm Management Assoc. No. 6

Jim Salomon

Gordon Piatt Partners Group

Mark D. Utech

Commerce Bank, N.A.

ST. JOSEPH

Robert J. Brown, Jr.

Robert J. Brown Lumber Company

James H. Counts

Attorney at Law

Richard N. DeShon

Artesian Ice & Cold Storage

Pat Dillon

Dillon Company

Karen M. Graves

Civic Leader

William J. Hurley

Smurfit/Stone Container Corporation

Larry R. Muck

Commerce Bank, N.A.

Kevin J. O’Malley

O’Malley Beverage, Inc.

Edward J. Reardon, II

Commerce Bank, N.A.

P. Gordon Robaska

Missouri Western State College

Emil H. Sechter

Commerce Bank, N.A.

E. Pat Speiser

Commerce Bank, N.A.

SOUTHEAST MISSOURI

CAPE GIRARDEAU

David F. Dormeyer

Prudential Bridgeport, Inc. Realtors

Judy Foeste

Kenneth E. Foeste Masonry, Inc.

Dr. Jonathan K. Foley

Cape Girardeau Surgical Clinic, Inc.

W. Cliff Ford

Ford & Sons Funeral Home, Inc.

Alan D. Gregory

Gregory Construction, Inc.

Mike Kasten

Kasten Farms

John A. Layton

Vogel, Layton & Lewis, LLC

Vincent J. Nooney

Commerce Bancshares, Inc.

Tom Reinagel

Kelso Supply Co, Inc.

SOUTHEAST MISSOURI

POPLAR BLUFF

Larry L. Cotrell

Cotrell Funeral Chapel

Luther P. Godwin

Ozark Ridge Golf Course

Donald E. Hamm

Retired

Larry Hillis

Larry Hillis Chrysler-Plymouth-Dodge-Jeep

James P. McLane

McLane Livestock Transport, Inc.

Karen J. Miller

Spain, Merrell & Miller

Vincent J. Nooney

Commerce Bancshares, Inc.

Sam Schalk

Gamblin Lumber Company, Inc.

Dr. Ben N. Till

Kneibert Clinic

Doctors Regional Medical Center

Roger L. Tolliver

Commerce Bank, N.A.

BARRY COUNTY

William A. Easley, Jr.

Commerce Bank, N.A.

Joe R. Ellis

Ellis, Ellis & Cupps

John Henbest

Farmer

Jon L. Horner

Commerce Bank, N.A.

Mike McCracken

Jakel Industries

Eugene Miekley

Miekley and Cupps, DVM Office

Doug Neff

Commerce Bancshares, Inc.

Mike Petrie

Commerce Bancshares, Inc.

Keith Shumaker

Shumaker Tire, Inc.

LEBANON

Jerry N. Benson

Commerce Bank, N.A.

Lester M. Evans

Farmer

Alvin D. Meeker

Commerce Bank, N.A.

Mike Petrie

Commerce Bancshares, Inc.

Gary Pulsipher

Breech Medical Center

Dan M. Waterman

CPA

COLUMBUS

Bill Amyx

Powrachute Corporation

Jay Hatfield

Hatfield-Vance Motors, Inc.

Wesley C. Houser

Commerce Bank, N.A.

Richard Lloyd

Commerce Bank, N.A.

Doug Neff

Commerce Bancshares, Inc.

Charles Norris

Investments

Darrell Shumake

Attorney at Law

MANHATTAN

John Chalmers

Kansas State University

Don E. Combs

State Mutual Life Insurance Company

Tom Giller

Commerce Bank, N.A.

Edmond Q. Haggart

Commerce Bank, N.A.

Neal Helmick

Griffith Lumber Company

James H. Linn

Retired

Commerce Bancshares, Inc.

James T. McCullough

McCullough Development, Inc.

Dr. Roger P. Reitz

Medical Associates of Manhattan

Eleanor G. Stolzer

Griffith Lumber Company

L.W. Stolzer

Griffith Lumber Company

Kenneth W. Thomas

Commerce Bank, N.A.

John Walters

Walters Morgan Construction, Inc.

Roy Worthington

Charlson & Wilson Bonded Abstracters

HANNIBAL

Robert E. Ayers

Ayers Oil Company/Illinois Ayers Oil Co.

David M. Bleigh

Bleigh Construction Co.

John C. Grossmeier

Hannibal Regional Healthcare System

James E. Janes

Bick Broadcasting Co.

Jerold W. Lee

Commerce Bank, N.A.

Vincent J. Nooney

Commerce Bancshares, Inc.

Charles E. Rendlen, III

The Rendlen Law Firm, LLC

HAYS

Gene Argo

Midwest Energy, Inc.

William F. Aubel

A & A Coors

COMMUNITY DIRECTORS[CONT.]

James W. Aubel

A & A Coors

James Bartels

Commerce Bank, N.A.

Don G. Bickle

S & W Supply Co., Inc.

D.G. Bickle, Jr.

Warehouse, Inc.

Dr. John Jeter

Hays Medical Center

Ken Johnson

Allied, Inc.

Verland Leiker

Commerce Bank, N.A.

James H. Linn

Retired

Commerce Bancshares, Inc.

Robert E. Schmidt

Eagle Communications, Inc.

Gary Shorman

Eagle Communications, Inc.

Thomas L. Thomas

Commerce Bank, N.A.

Vance Westhusin

Midland Marketing Co-op, Inc.

JOPLIN

Dale L. Blanchard

Commerce Bank, N.A.

Kevin R. Bowman

Ozark Terminal

Stan Cox

O & F Machine

E. Brad Fagan

Fagan Electric Co.

Konrad L. Heid

Commerce Bank, N.A.

David C. Humphreys

TAMKO Roofing Products, Inc.

Fannun A. Kanan

Canaan Land Development

Barbara J. Majzoub

Yorktown Properties

Doug Neff

Commerce Bancshares, Inc.

Fred S. Osborn

Commerce Bank, N.A.

Peter B. Ramsour

Ramsour & Son Distributing

D. Troy Richards

Joplin Building Material

William M. Scruggs

Larry Hickey Company

Russell G. Smith, II

May Drug Stores – Missouri Division

GARDEN CITY

Caverly Baffa

Finnup Foundation

Dick Fankhauser

Rental Enterprises

Richard Harp

Commerce Bank, N.A.

Dennis Kleysteuber

Farmer/Rancher

Dr. Thomas Koksal

Plaza Medical Center

E. Grant Larkin

Family Dentistry

Stewart Nelson

Gibson, Mancini, Carmichael & Nelson

Architects

Michael A. Reed

Southwest Feeders

Lee M. Reeve

Reeve Cattle Co.

Reeve Agri Energy

Archie Rooney

Farmer/Rancher

Pat Sullivan

Field Service Solutions

INDEPENDENCE

James P. Kelly

Commerce Bank, N.A.

James H. Linn

Retired

Commerce Bancshares, Inc.

Roy D. Martin

Retired Farmer & Stockman

Phil Near

Crescent Oil

Doug Neff

Commerce Bancshares, Inc.

William L. (Larry) O’Malley

O’Malley Equipment Company

Fred S. Osborn

Commerce Bank, N.A.

Albert K. Sewell, Jr.

Commerce Brokerage Services, Inc.

Paul H. Viets

Commerce Bank, N.A.

Julie Voelker

Commerce Bank, N.A.

PITTSBURG

James L. Belew

Pittsburg Automotive Supply, Inc.

Dr. Thomas W. Bryant

Pittsburg State University

Harvey R. Dean

Pitsco, Inc.

Byron A. Deill

Broadway Lumber Company

C. L. Farabi

Pepsi-Cola Bottling Company, Pittsburg

Roberta A. McNay

Investments

George E. Pitzer

Investments

Vernon L. Plattner

Investments

Ronald L. Rhodes

Rhodes Grocery, Inc.

Mark A. Werner

Commerce Bank, N.A.

Judith A. Westhoff

Commerce Bank, N.A.

Wendell L. Wilkinson

Commerce Bank, N.A.

OMAHA

Charles G. Kim

Commerce Bancshares, Inc.

Robert L. Linn

Commerce Bank, N.A.

Kenneth J. Ragan

Commerce Bank, N.A.

Warren W. Weaver

Retired

Commerce Bancshares, Inc.

Richard A. Zehnacker

First Data Resources

OFFICERS	DIRECTORS
Chairman of the Board, President	Giorgio Balzer
and Chief Executive Officer	Chairman of the Board and Chief Executive Officer
David W. Kemper	Business Men’s Assurance Company of America
Vice Chairmen	Fred L. Brown, FACHE*
Jonathan M. Kemper	Visiting Scholar and Executive-in-Residence
William A. Sullins, Jr.	The George Washington University Medical Center
	School of Public Health and Health Services
Executive Vice President, Treasurer
and Chief Financial Officer	John R. Capps
A. Bayard Clark	President and Chief Executive Officer
	Plaza Motor Company
Executive Vice Presidents
Charles G. Kim	W. Thomas Grant II
Seth M. Leadbeater	Chairman
Robert C. Matthews, Jr.	LabOne, Inc.
Senior Vice Presidents	James B. Hebenstreit*
Andrew F. Anderson	President
Kevin G. Barth	Bartlett and Company
Sara E. Foster
Michael J. Petrie	David W. Kemper
Robert J. Rauscher	Chairman, President and Chief Executive Officer
V. Raymond Stranghoener	Commerce Bancshares, Inc.
Vice President, Secretary	Jonathan M. Kemper
and General Counsel	Vice Chairman
J. Daniel Stinnett	Commerce Bancshares, Inc.
Controller	Robert C. Matthews, Jr.
Jeffery D. Aberdeen	Executive Vice President
	Commerce Bancshares, Inc.
Vice Presidents
Johnna M. Cook	Terry O. Meek
Carol M. Dickinson	President
Charles F. Erker	Meek Lumber Yard, Inc.
John K. Handy
Richard A. Heider	Benjamin F. Rassieur III*
Justin R. Jones	President
Patricia R. Kellerhals	Paulo Products Company
Kent D. Kirby
Duane E. Locher	L.W. Stolzer
Jeffrey S. Missman	Chairman of the Board and Chief Executive Officer
Douglas D. Neff	Griffith Lumber, Inc.
Vincent J. Nooney
Rebecca K. O’Connor	William A. Sullins, Jr.
Thomas E. Pitman	Vice Chairman
Geoffrey C. Thomas	Commerce Bancshares, Inc.
Auditor	Andrew C. Taylor
Wayne McGaugh	President and Chief Executive Officer
	Enterprise Rent-A-Car Company
	Mary Ann Van Lokeren
	Chief Executive Officer
	Krey Distributing Company
	Robert H. West*
	Retired/Chairman and CEO
	Butler Manufacturing Company
	* Members of Audit Committee

COMMERCE BANCSHARES, INC.

     1000 Walnut P.O. Box 13686
Kansas City, MO 64199-3686
phone: 816-234-2000 e-mail: buycbsh@cbsh.com
home page: www.commercebank.com
An Equal Opportunity Employer MK2900